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2012 Presidential Election and the CPA Profession

AICPA

Posted: 29 Oct 2012 04:00 AM PDT The 2012 presidential election is just around the corner. While it’s not clear who will win the White House, there are many reasons you should be paying close attention. And we’re seeing indications that you’re doing just that. In a CPA Letter Daily poll on Oct. 16, 65% of more than 3,200 respondents said they would be watching that night’s presidential debate. There is no shortage of issues affecting CPAs and our clients or employers. Highlighted below are some of the important financial issues facing our country: “Fiscal cliff.” The uncertainty surrounding potential tax increases and spending cuts, as well as related issues, has brought Washington to a stand-still. Uncertainties include extension of the Bush-era tax cuts, a fix for the Alternative Minimum Tax, tax increases attached to the Patient Protection and Affordable Care Act, and a package of mandatory federal spending cuts totaling $1.2 trillion over 10 years. The AICPA understands the effect such uncertainty has on tax planning. We will continue to serve as a guiding voice, providing timely and relevant resources for our members, including a dedicated webpage, for all issues relating to the fiscal cliff.  Changes in regulators. Regardless of who wins the presidency, we could see changes in some of the country’s top regulatory posts. Speculation has surrounded Treasury Secretary Timothy Geithner and SEC Chairman Mary Schapiro, for example. Current IRS Commissioner Doug Shulman announced he is departing effective Nov. 9. The AICPA has always worked to serve as a resource for regulators and will continue to do so with whoever holds those positions. New legislators. Races for Senate seats and the House of Representatives may usher in new faces. The AICPA has been a successful advocate for the profession and the public with members of Congress on both sides of the aisle. We will continue our bipartisan approach to serve our members and the businesses and individuals they work for or serve. Impact on small business. Both President Obama and Governor Romney have focused on small business throughout their campaigns. Each has proposed tax and economic plans that would impact small businesses in myriad ways. The complex proposals, combined with an already-complex economic environment, give CPAs an opportunity to reinforce their role as trusted business advisers. New regulations, changes in tax law and continued economic uncertainty will mean businesses will need CPAs’ objective expertise more than ever.   Tax reform – A concerted attempt at tax reform is likely beginning early next year regardless of who wins the White House. The AICPA has been engaging Congress regarding tax simplification. We’ve created a list of 10 important simplification issues and have started meeting with congressional tax committees, and will continue to act as a resource for Congress in this critically important area of law. More information and resources are available on our tax reform webpage.  All told, the range of issues before us underscores the impact of regulations on our profession. It also demonstrates the need for more CPAs to get involved in the process. Currently, 8 CPAs serve in Congress, and one governor and one lieutenant governor are CPAs. In addition to the record 8 CPAs in Congress, 2 others have emerged from the primaries to the general election. Topping the record of 8 would be a great outcome. CPAs have invaluable insights, experience and business acumen that make them uniquely qualified to serve as our state and national leaders and we need more of those skills on the political scene. Now is the time for CPAs to begin thinking about congressional candidacies in 2014.

In the News: Now is the Time to Lower your 2012 Tax Bill

AICPA Insights

---

Posted: 26 Oct 2012 04:31 AM PDT Fall, or autumn if you’re a season snob, is a busy time of year at the AICPA. Earlier this week, we held our Fall 2012 Governing Council Meeting – but you know that already because we’ve covered all the news earlier in the week. In addition to The World Series and beautiful foliage, fall is also the time to get proactive and take steps to lower your 2012 tax rate if you haven’t already done so. This year, it is particularly important for taxpayers to pay close attention to the planning process with the uncertainty surrounding the potential expiration of the Bush tax cuts and many widely-used tax cuts which have not yet been renewed for the 2012 tax year . Susan B. Garland spoke to Melissa Labant,director of taxation at the AICPAabout this issue for a recent article in Kiplinger's Retirement Report focused on this issue. The article calls attention to the fact that one of the biggest changes on the books for 2013 is a 3.8% surtax on investment income for singles with a modified Adjusted Gross Income of more than $200,000 ($250,000 for married couples). The tax applies to the smaller of net investment income or the amount by which taxable income exceeds the thresholds. Labant suggests that certain investors could consider increasing the amount they have invested in municipal bonds, which are exempt from the surtax. "I would not invest in municipal bonds simply to avoid the 3.8% tax," she said. "But a lot of people have not invested sufficiently in fixed income as they prepare to retire, and taxes are an added reason to be invested in municipal bonds."  The article also includes planning tips on charitable giving, IRAs and healthcare expenses. While proactive tax planning may help you lower your overall tax burden, understanding which taxes you pay is just as important. As The Ledger reported earlier this week, the AICPA unveiled a tool earlier this year which calculates estimated federal, state and local tax obligations, and also provides insight on how much is being paid annually in taxes that generally are not documented in individual tax returns. The Total Tax Insights™ calculator  is a free online tool that may change the way you think about your taxes. The article notes that, one of the main goals of the calculator is to promote tax education and understanding. The calculator website also features a glossary of tax-related terms and links to information on the different taxes represented. The calculator factors in more than 20 taxes at the federal, state and local levels for more than 3,000 U.S. counties. It is important to know that while all taxes are not represented in the calculator and the amounts generated are estimates, it is an effective tool to get a sense of how much you are paying, which is invaluable as you do your year-end tax planning. James Schiavone, AICPA Staff.

No matter who wins the upcoming election....

Penalties

          A filer who didn’t pay self-employment taxes still gets a break on penalties from the Tax Court.  As an employee at the International Monetary Fund, she was required to pay SECA taxes on her salary.  She met with an IMF employee, who prepared a schedule of estimated tax payments for her that included SECA tax, and she made the payments.  But she never fully understood that self-employment tax was due, so she didn’t fill out Schedule SE and wound up receiving a large refund by mistake.  IRS caught her error and slapper her with a 20% negligence penalty, but the Tax Court said she made an honest mistake (Chien, TC Memo. 2012-277).

          But another taxpayer wasn’t so lucky.  He worked for the World Bank and similarly failed to pay self-employment tax on his wages.   The Tax Court didn’t let him off the hook for the penalty because his employment agreement and his W-2 stated that he owed SECA tax.  When he took his W-2 to his preparer, he cut off the portion that said SECA tax was due (Diaz, TC Memo. 2012-280).

Estate Taxes

          Using a family limited partnership can save a bundle in estate taxes…Even if the asset transfer to the partnership is incomplete before death, as this case shows.  A widow’s tax advisers told her that if she transferred her bonds to a newly formed family partnership, her estate would be able to claim discounts on her interest.  She agreed to the plan, but she died before transferring the bonds.  Nevertheless, an Appeals Court ruled that the partnership was validly established before her death because, under state law, her intent to fund the partnership was enough to deem that the bonds had been transferred to it (Keller, 5^th Cir.).  Her executors eventually formalized the transfer of the bonds after her death.

          IRS has finally released Form 706 for estates of people who die this year, just as returns are due for those who died in Jan.  The instructions provide guidance for electing portability of a deceased spouse’s unused estate and gift tax exemption. 

          Estates wanting to make the portability election must timely file Form 706, even if they are not otherwise required to file an estate tax return.  But executors of these small estates can estimate the value of assets passing to spouses or charity.  There’s a table in the Form 706 instructions to help executors on what to enter.

          A draft of the 2012 gift tax return is also available.  It has a new schedule to account for the higher exemption for surviving spouses who benefit from portability.

Year-End Planning

          Turn to year-end moves that your business can make to save taxes, now that we are in the final quarter of 2012.  Actions taken between now and the end of the year can save you and your company a boatload of taxes.

          If you are purchasing assets, try to place them in service by Dec. 31.  50% bonus depreciation is the reason.  Firms can write off half of the cost of qualifying assets put in service this year, even for assets bought in late Dec.  Bonus depreciation is available on new assets with useful lives of 20 years or less…Machines, equipment, land improvements and farm structures such as chicken coops.  Leasehold improvements made to the interiors of commercial realty are eligible, too.  Bonus depreciation is scheduled to end after 2012, and probably won’t be revived.

          Expensing is also available for assets placed in service by Dec. 31.  Right now, businesses can expense up to $139,000 of assets put in use in 2012.  And the ability to take expensing in lieu of depreciation phases out dollar for dollar once over $560,000 of assets are placed in service.  There is a good chance that lawmakers will act to raise the 2012 maximum write-off to $500,000 and start the phaseout at $2 million.

          It really pays to put a new heavy SUV in service before the end of 2012.

          You can deduct much of the cost this year.  Say your business pays $60,000 for a new SUV with a loaded gross weight over 6,000 pounds and puts it in use in Dec.  First, the firm can expense $25,000.  Half of the remaining $35,000 cost…$17,500…qualifies for 50% bonus depreciation.  The firm can take 20% of the $17,500 balance…$3,500…as regular depreciation.  If the vehicle is used 100% of the time for business, the total first-year write-off is $46,000.  Used SUVs don’t get bonus depreciation. 

          You can fully write off new pickups with loaded weights over 6,000 pounds.  Ditto for used heavy pickup trucks if the cargo bed is at least six feet in length.

          For lighter vehicles, the maximum deduction in the first year is $11,060.

          Buying too many assets in the last quarter can cost you some write-offs on property that isn’t eligible for bonus depreciation.  If you make more than 40% of your 2012 asset purchases after Sept., regular depreciation on all assets put in use in 2012 is figured on a quarterly basis.  So assets you buy in late 2012 get 1 ½ months of depreciation instead of six months’ worth.  This rule does not apply to buildings.

          Business owners can shift income and expenses between 2012 and 2013.

          High-income professionals may want to speed up billings to report income in 2012.  That will lock in the 35% top rate.  If Obama wins in Nov., it is conceivable that rates on upper-incomers will rise in 2013.  Those who will be in the same bracket or a lower tax bracket in 2013 can adopt the opposite strategy and delay their billings. 

          Similarly, owners may want to ensure year-end bonuses are taxed in 2012 rather than in 2013.  There will be time after the elections to implement a strategy.

          Deductions for accrual method firms are limited.  They can’t deduct in 2012 bonuses that are deferred to 2013 by owners of more than 50% of regular corporations or by owners of any interest in an S corporation, personal service firm or partnership.

          Firms can shift expenses from on year to another to tweak their income.  However, the Revenue Service will balk if there is too much distortion of earnings.

          And weigh taking dividends in lieu of salary.  This pays off if the corporation is in a low tax bracket and the owner is in a high bracket.  The owner’s tax savings due to the 15% top rate on dividends plus the payroll tax savings on the dividend can exceed the extra tax the corporation pays because the dividend isn’t deductible.  This won’t work for S firms.  Or for personal service firms…they pay a flat 35% tax.  No matter who is elected president, the maximum tax rate on dividends received by high-incomers is going up next year on account of the 3.8% Medicare surtax.

To be continued…

No matter who wins the upcoming election....

The Kiplinger Tax Letter

Circulated Biweekly to business clients since 1925

1100 13th Street NW, Washington, DC 20005 Kiplinger.com Vol. 87, No. 21

Dear Client,

Washington, Oct. 12, 2012

No matter who wins the upcoming election...

 Itemized deductions will be in the crosshairs.  Although the two candidates have very different views on how to overhaul the current income tax system, they both think itemized deductions should be curbed.

President Obama wouldn't kill itemizations, so the deductions for mortgage interest, donations to charity, and state and local taxes would be retained. But he'd nick these write-offs in two ways

         

First, Obama would reinstate a 3% cutback in itemized deductions that lapsed after 2009, but at higher income levels than before.  Deductions other than medical expenses, investment interest paid or casualty losses would be trimmed by 3% of the amount by which AGI exceeds $250,000 for MFJ, $225,000 for HH, $200,000 for Singles and $125,000 for MFS.  The reduction could not exceed 80% of itemized deductions.

  

Second, he'd reduce the value of itemized deductions for high-incomers...write-offs that remain after applying the 3% reduction that we just detailed for you.  

  

The tax value of itemizations would be capped at 28% beginning in 2013.  When coupled with his proposal to reinstate the 36% and 39.6% brackets, taxpayers in brackets above 28% would be paying an extra tax of up to 11.6% of their write-offs.

  

But the president's proposal would hit more than just itemized deductions:

  

Interest on municipals and employer health coverage would be partly taxed for filers above the 28% bracket.  The interest and the value of coverage would be taxed at up to 11.6%.  Also nailed: Tax breaks for domestic production, student loan interest, college tuition, self-employeds' health insurance, IRA payins and 401(k) contributions.

  

Mitt Romney takes a different tack.  He'd put a cap on itemized deductions, although he has not provided a detailed proposal yet.  Recently, he has mentioned that filers could be limited to $17,000 of itemized deductions, although he's also said the ceiling could end up at $25,000 or even $50,000.  It's not clear whether the ceiling would be the same for singles and married.  He's also state that he'd keep write-offs such as mortgage interest and donations to charities.  But whatever the final number, if your total Schedule A deductions exceeded the cap, you would get no tax benefit for the excess itemizations, even if they consisted of mortgage interest or donations.

  

The exact deduction limit depends on the fate of Romney's tax reform plan.  He is proposing to slash marginal tax rates for individuals by 20% across the board.  Tax rates currently range from 10% to 35%.  Under Romney, they'd be 8% to 28%.  That would produce a tax cut for those folks who don't itemize.  Romney has stated that he wants tax reform to be revenue neutral.  And he has said that his tax plan won't reduce taxes paid by the wealthy.  Therefore, the higher the cap is on deductions, the more pressure there will be to reduce the size of the tax cuts for high-incomers.  So upper-incomers with very large itemized deductions may wind up net losers.

Health Care

          An employer’s religious objections to the health care law are overruled by a federal district court.  A for-profit company whose owner is Catholic and operated the firm consistent with his religious beliefs challenged the requirement that health plans subject to the law mst provide no-cost coverage for contraception.  But the court dismissed the suit (O’brien v. Health and Human Services, D.C., Mo.).  In Aug., we reported on a similar lawsuit in which the private employer prevailed.  The case is on appeal.  The Supreme Court will probably have the final say.

Payroll Taxes

          More on refund claims for FICA tax on severance pay for laid-off workers: Claims should be filed sooner rather than later.  Last month, the Sixth Circuit ruled that severance payments made to involuntarily laid-off workers are exempt from FICA tax.  Because many companies withheld payroll taxes on these payments, large refunds will be due if the Supreme Court upholds the Sixth Circuit’s decision.  That will catch the eye of revenue hungry taxwriters, who may very well decide to legislatively overrule the decision.  Any congressional action is likely to be done on a prospective basis, so refund claims filed before Congress acts should be OK.  Claims should be filed on Form 941-X, not Form 843 as we indicated last month.  Firms whose protective refund claims were denied should use Form 907 to ask the Service to agree to stop the running of the two-year limitation period for filing a lawsuit in federal court for a refund.  IRS usually Oks these requests.

To be continued…

Shulman to Finish His Term as IRS Commissioner on Nov. 9

IR-2012-76, Oct. 10, 2012 WASHINGTON — The IRS today announced that Doug Shulman, the 47th commissioner of the Internal Revenue Service, has decided to step down on Nov. 9, the last day of his term. Shulman indicated earlier this year that he planned to step down at the end of his term.
Shulman has served as IRS Commissioner since March 24, 2008. Under the law, IRS commissioners are nominated by the President and confirmed by the Senate for a term of up to five years with their terms ending on Nov. 12 of their final year (Nov. 9 is the last work day of Shulman's term because Nov. 12 is a federal holiday).
"The IRS team made remarkable progress in the last few years during a challenging period," Shulman said. "It has been an honor to serve the American people during this dynamic time."
Deputy Commissioner for Services and Enforcement Steven T. Miller, who is a 25-year veteran of the IRS, will serve as acting IRS Commissioner when Shulman steps down.

Partnership

A partnership is a relationship between two or more persons who join to carry on a trade or business, with each person contributing money, property labor or skill and each expecting to share in the profits and losses of the business whether or not a formal partnership agreement was made. 

RP-2012-42: Amounts of unused housing credit carryovers allocated to qualified states

26 CFR 601.105:  Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability. 
(Also Part I, § 42; 1.42-14.)

 

Rev. Proc. 2012-42   

SECTION 1. PURPOSE
     This revenue procedure publishes the amounts of unused housing credit carryovers allocated to qualified states under § 42(h)(3)(D) of the Internal Revenue Code for calendar year 2012.

SECTION 2. BACKGROUND
Rev. Proc. 92-31, 1992-1 C.B. 775, provides guidance to state housing credit agencies of qualified states on the procedure for requesting an allocation of unused housing credit carryovers under § 42(h)(3)(D).  Section 4.06 of Rev. Proc. 92-31 provides that the Internal Revenue Service will publish in the Internal Revenue Bulletin the amount of unused housing credit carryovers allocated to qualified states for a calendar year from a national pool of unused credit authority (the National Pool).  This revenue procedure publishes these amounts for calendar year 2012. 

SECTION 3. PROCEDURE
     The unused housing credit carryover amount allocated from the National Pool by the Secretary to each qualified state for calendar year 2012 is as follows:

Qualified State                     Amount Allocated     

   Alabama                                      46,444

   Arizona                                       62,688

   California                                   364,494

   Connecticut                                 34,627

   Delaware                                     8,772

   Georgia                                      94,916

   Idaho                                           15,327

   Illinois                                       124,450

   Kansas                                       27,766

   Kentucky                                     42,253

   Louisiana                                   44,240

   Maine                                         12,844

   Maryland                                     56,362

   Massachusetts                           63,704

   Michigan                                    95,506

   Minnesota                                   51,686

   Nebraska                                     17,819

   Nevada                                       26,335

   New Jersey                                 85,304

   New Mexico                                 20,136

   New York                                   188,235

   North Carolina                             93,381

   Ohio                                           111,644

   Oregon                                        37,442

   Pennsylvania                             123,228

   Puerto Rico                                 35,845

   Rhode Island                               10,166

   South Carolina                             45,250

   South Dakota                                7,969

   Texas                                         248,283

   Utah                                             27,244

   Vermont                                         6,058

   Virginia                                         78,297

Washington                                 66,049

   Wisconsin                                     55,235

EFFECTIVE DATE
This revenue procedure is effective for allocations of housing credit dollar amounts attributable to the National Pool component of a qualified state's housing credit ceiling for calendar year 2012. 

DRAFTING INFORMATION
The principal author of this revenue procedure is Julie Hanlon-Bolton of the Office of Associate Chief Counsel (Passthroughs and Special Industries).  For further information regarding this revenue procedure contact Ms. Hanlon-Bolton on (202) 622-3040 (not a toll-free call). 

Pre-order the 2013 tax calendar now

 

The 2013 IRS Tax Calendar for Small Business and Self Employed, Publication 1518, (English and Spanish) will ship in December.

Order online or call (800) 829-3676.

What is the Federal Gift Tax?

Bic Bicmatic Grip Mechanical Pencils - 0.7 mm - Mechanical Pencils (Google Affiliate Ad)The Federal gift tax is a tax on the right to transfer property from a living person to other persons or trusts. Reported on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, data are collected on the donor and recipient of gifts that exceed the annual exclusion. The name of the recipient, recipient's relationship to the donor, type of property, and value of gift are reported, as are the total value of a donor's lifetime gifts and tax computation items.

Extensions expire Oct. 15

What is the Federal Estate Tax?

The Federal estate tax is a tax on the right to transfer property at death. The tax, reported on Form 706, United States Estate (and Generation Skipping Transfer) Tax Return, is applied to estates for which at-death gross assets, the "gross estate," exceed the filing threshold. Included in gross estate are real estate, cash, stocks, bonds, businesses, and decedent-owned life insurance policies. Deductions are allowed for administrative expenses, indebtedness, taxes, casualty loss, and charitable and marital transfers. The taxable estate is calculated as gross estate less allowable deductions.

Having Trouble with the IRS?  Let us help.  Give us a call.

Visit our office for some tax free halloween candy

Activity Based Costing (ABC)

ABC refines a costing system by identifying individual activities as the fundamental cost objects.

Activities may include:

a. Design products & Processes
b. Operate machines to manufacture
c. Clean & maintain product
d. Distribute product to customers


To Implement ABC:

1. Identify the products that are the chosen cost objects
2. Identify the direct costs of the products
3. Select the activities & cost-allocation bases to use for allocating indirect costs to the products
4. Identify the indirect costs associated with each cost-allocation base
5. Compute the rate per unit of each cost-allocation base
6. Compute the indirect costs allocated to the products
7. Compute the total cost of the products by adding all direct and indirect costs assigned to the products

EPPS

Excess Purchase Price Schedule


Purchase Price
Sub's BV %
EPP
Allocation Overvalued or Undervalued:
Assets
Liabilities
Intangibles
Goodwill

Consolidation Journal Entries

SAIDEP*C
S - Elimination of Subsidiary's Stockholders Equity along with recognition of non controlling interest.
A - Allocation of subsidiary total fair value in excess of book value, unamortized balances
I - Elimination of intra-entity income
D - Elimination of intra-entity dividend payments
E - Recognition of amortization expenses on fair-value allocations
P - Elimination of the intra-entity debt
*C - Adjust parents Retained Earnings from the Partial Equity Method or the Initial Value method to the equity method.

IVM Method Entries:

S:
Common Stock
Retained Earnings 1/1
   Investment in Company
   Noncontrolling Interest in Company

A1 & A2
Buildings
Land
Equipment
Goodwill
   Investment in Company
   Noncontrolling Interest in Company

I:
Dividend Income
   Dividends Paid

D:
No Entry when using IVM method

E:
Depreciation Expense
Amortization Expense
   Buildings
   Equipment

P:
Liabilities
   Current Assets

*C:
Investment in Company
   Retained Earnings, 1/1

5 Improvements to Civil Litigation Procedure for Financial Expert Witnesses

AICPA Insights

Posted: 03 Oct 2012 04:00 AM PDT How can civil litigation become less costly and complicated and more fair for all involved? Although rules of civil procedure call for a quick, inexpensive and fair determination of all civil actions, those goals often are not met. The AICPA Forensic and Valuation Services Executive Committee and the members of the FVS membership section are well aware of the many problems within the system that can cause lengthy delays and unnecessary expenses. Because CPAs have a unique perspective on the issues involved, the FVS Executive Committee, in conjunction with the Institute for the Advancement of the American Legal System at the University of Denver, surveyed FVS Section members, many of whom are frequently retained as expert consultants or testifying witnesses in civil litigation. Based on the survey findings, the executive committee has released a new report, “Another Voice: Financial Experts on Reducing Client Costs in Civil Litigation.” The report offers stakeholders in the civil justice system--including judges, attorneys, financial experts and clients--five recommendations to enhance the effectiveness of financial experts and efficiency of their use in the civil pretrial process: Judges should implement early and consistent active case management. The report spotlights particular problems, such as continuances, that can lengthen preparation time and drive up financial expert witness costs. Clients and attorneys should involve experts early in the process. Although financial experts often are brought in late in the game, earlier involvement can lead to more effective case management and lower overall costs. Attorneys should target, focus and streamline expert depositions and discovery. While beneficial, discovery can be a lengthy and expensive process. FVS Section members recommended changes that would reduce gamesmanship and encourage substantive information gathering. Attorneys’ Daubert-like challenges should be appropriately targeted and acted upon promptly by the court. Among other observations, the report noted that if a challenge is brought, it is important that the expert involved be notified and given an opportunity to participate effectively in the challenge process. Attorneys and the court should develop a process for the collaboration and cooperation of opposing experts where appropriate. Financial experts can be instrumental in putting this recommendation to work. The FVS Executive Committee hopes that the report recommendations will be an important contribution to the ongoing conversation on how best to improve the system. They can serve as a starting point for dialogues among all types of expert witnesses. Some are already being tried in state and federal jurisdictions across the country. At the same time, the FVS Executive Committee and IAALS are involved in outreach and education efforts to encourage further consideration and implementation of needed changes. I recommend the report to all CPAs, because we all have a stake in any effort to promote a more accessible and reliable civil justice system. Elaine Leggett, CPA/CFF, Technical Manager - Forensic and Valuation Services, American Institute of CPAs. Most of Elaine’s career has been spent in public accounting.  Prior to joining the AICPA, Elaine was with a large local firm, working with clients from a broad range of industries, including construction, nonprofits, insurance, and healthcare, on tax, audit, and consulting engagements.

Watching the Presidential Debate!

Tax Statistics for 2012

Click this link:

http://www.irs.gov/uac/SOI-Tax-Stats---Summer-Bulletin-2012

My Employee or My Independent Contractor?

Unique Employment Tax Classification Situations in Government Entities – this Phone Forum discusses worker classification issues that are faced by government entities, including payments to elected and appointed officials, the use of election workers, and workers covered by a Section 218 Agreement. Specific topics include:

• Defining workers as employees or independent contractors
• Considerations in determining a worker's status
• Important Forms, such as Form SS-8
• How to treat payments to election workers
• How to report the payments made to government workers
• What to do if a worker is misclassified

You may listen to this recording by clicking here.

Client Data Review is an easy and quick way to correct posting mistakes

QuickBooks 2013 Client Data Review Improvements

September 25, 2012 | By Charlie Russell | Reply

There are a couple of changes to the Client Data Review feature of the Accountant editions of QuickBooks 2013 that are helpful.

PLEASE NOTE that much of this is based on information from an early release candidate of QuickBooks 2013 – it is possible that some features may vary from what is described here. Also, this applies strictly to the U.S. editions of QuickBooks in the Windows environment. The UK and Canadian versions may include some of these features.

Write Off Invoices

Write Off Invoices has two changes that I am aware of, and one is important. Let me start by running through this feature very quickly in QuickBooks 2012 so I can show you where things have changed.

Here’s my invoice – with sales tax.

In the Write Off Invoices window in the Client Data Review (found in the Accountant versions) you can select the invoice, and you select an account for the write-off.

Here is the register for the invoice after the write-off. You see that we have a reversal of the invoice by a discount.

And the payment in the write-off account that I selected.

And, finally, here is what you see on the Sales Tax Liability report. Note that even though we wrote off the invoice, itstill shows in the sales tax liability report. That is a PROBLEM.

Now let’s look at the changes in QuickBooks 2013. I started with an invoice that duplicates what I used in my QuickBooks 2012 example. Here is the Write Off Invoices window. Note that this is asking for a write off ITEM, not anaccount. That is a change – but I’m not sure it is a big improvement.

Here’s the register for the invoice – note that this is a credit memo, not a discount.

Here’s the write-off account register – showing the credit memo instead of a payment.

And, here is the sales tax liability report – and you see that the invoice does NOT show up here after the write-off. WONDERFUL!

I still have to look at this further, but at this point it is looking better than QuickBooks 2012.

Change Other Name Types

Change Other Name Types is a new entry in the Review List Changes section of the Client Data Review in QuickBooks 2013. This allows you to change any entry in the Other Names List to be a customer, vendor or employee.

Note that this feature actually exists in prior releases, the change here is that it is added to the Client Data Review window. That makes it more likely that you will find it. It also is found (as it was in 2012 and earlier) in the Activitiesmenu at the bottom of the Other Name List.

My Conclusion

A needed fix to a bug in QuickBooks, as well as a useful addition. Good!

Want to see QuickBooks 2013 in action? Join us for a FREE Webinar on September 28th, What’s New in QuickBooks 2013, presented by Doug Sleeter and Charlie Russell

About the Author (Author Profile)

Charlie Russell is the founder of CCRSoftware. He's been involved with the small business software industry since the mid 70's, and remembers releasing his first commercial accounting software product when you had a one-floppy disk drive system, loading the program from one floppy and then replacing that with the other floppy to hold the data. He has a special interest in inventory and manufacturing software for small businesses. Charlie is a Certified Advanced QuickBooks ProAdvisor and participates extensively in the QuickBooks Community user forums under the ID of CCRussell. Visit hisCCRSoftware web site for information about his QuickBooks add-on products. Charlie can be reached at charlie.russell@sleeter.com He is also the author of the California Wildflower Hikes blog and a regular blog contributor to the Intuit Inner Circle. Connect with Charlie at Google