Category: News

Why you may want to incur medical expenses before year-end

Currently, if your eligible medical expenses exceed 7.5% of your adjusted gross income (AGI), you can deduct the excess amount. But in 2013, the 2010 health care act increases this “floor” to 10% for taxpayers under age 65.

Eligible expenses can include health insurance premiums, medical and dental services and prescription drugs. Expenses that are reimbursed (or reimbursable) by insurance or paid through a tax-advantaged health care account (such as a Flexible Spending Account or a Health Savings Account) aren’t eligible.

To potentially be able to deduct more health care costs, consider “bunching” nonurgent medical procedures and other controllable expenses into alternating years. For example, if your year-to-date medical expenses already exceed 7.5% of your projected 2012 AGI and you’re anticipating elective surgery or major dental work in early 2013, you could instead schedule it for this year. Or you could stock up on prescription meds (to the extent allowed) and buy new contact lenses or glasses before year end. Bunching expenses into 2012 may be especially beneficial because of the scheduled floor increase. But keep in mind that, for alternative minimum tax purposes, the 10% floor already applies. Also, if tax rates go up in 2013 as scheduled, your deductions might be more powerful then. Finally, be aware that the floor increase could be repealed by Congress.

For more ideas with year-end tax strategies, call today!

ATA Invests $25,000 in Local Library

Alexander Thompson Arnold CPAs has taken a bold stand for education in Dyer County by making a $25,000 gift to the McIver’s Grant Public Library Renovation Project.

The firm has pledged $5,000 each year for five years to help with the renovation of the library’s new building. Not only does the gift support literacy in the community, it also supports the efforts to keep Downtown Dyersburg beautiful and enables Dyer County to be competitive in recruiting more jobs to the area.

“ATA believes that success in life begins with a foundation strong in reading and math skills, and the public library plays a critical role in making this a reality in our community,” said Steve Carmichael, ATA’s Senior Partner in Dyersburg. “With our deep commitment and this investment, we are helping Dyer County residents have access to learning and enrichment tools for generations to come. We are proud to make this investment in the future of our community.

In 1946, the firm was founded in Dyersburg by William P. Alexander, Jr. when he returned from World War II. Shortly after opening his practice, the local library moved to the Dyersburg Women’s Club on the corner of Masonic and Mill streets, only a block from ATA’s office at 185 North Church Street. Through the years, Alexander Thompson Arnold CPAs has grown to become the sixth largest accounting firm in Tennessee, and the McIver’s Grant Public Library has grown into a hub for information.

You can help the library to provide services to the residents of the West Tennessee area and invest in Dyer County’s future. Mail your donation to McIver’s Grant Public Library, P O Box 1077, Dyersburg, TN 38025.

Do you want to learn more about ATAs Community Involvement?  Click here.

Supreme Court Upholds Health Care Law, Impacting Businesses and Individuals — and Their Taxes

On June 28 the U.S. Supreme Court, in a much-anticipated ruling, generally upheld the Patient Protection and Affordable Care Act of 2010. The decision has far-reaching implications, many of which will financially impact businesses and individuals.

The main provision at issue was whether it was constitutional for the act to require that, starting in 2014, most Americans have a basic level of health insurance or pay a penalty. In a 5-4 decision, the Court found that the provision was constitutional within Congress’s power under the taxing clause.

The decision means that, generally, without congressional action, the provisions of the health care act that already have gone into effect will stand, and the provisions that are scheduled to go into effect in future years will, indeed, go into effect.

Some key provisions affecting businesses include the following:

Tax credits for certain small businesses that provide health care coverage to employees. This provision went into effect in 2010 and is available through 2013.

Penalties for failing to provide health care coverage. These are scheduled to go into effect in 2014.

Various requirements related to the scope of health care coverage provided. Examples include coverage of employees’ young adult children and limits on waiting periods for coverage under a group policy. Some went into effect in 2010; others are scheduled to go into effect in 2014.

And, here are some key provisions affecting individuals:

Higher Medicare taxes for high-income taxpayers. Starting in 2013, taxpayers with earned income in excess of certain limits will pay an additional 0.9% Medicare tax on the excess. In addition, taxpayers will pay a new, 3.8% Medicare tax on unearned income, such as interest, dividends, rents, royalties and certain capital gains, to the extent that their modified adjusted gross income exceeds certain thresholds.

Increase in medical expense deduction floor. Starting in 2013, the act raises the threshold for deducting unreimbursed medical expenses from 7.5% to 10% of adjusted gross income.

Changes to Flexible Spending Accounts (FSAs) for health care. Starting in 2011, tax-free FSA distributions could no longer be used to pay for unprescribed over-the-counter medicine. Starting in 2013, annual contributions to FSAs for medical expenses will be limited.

If you’d like to learn more about how the Supreme Court’s decision might affect your business’s finances or your own, please contact us. We can help businesses determine what, if any, changes they may be required to make — or may want to make — to the health coverage they offer in light of the decision. And we can help individuals determine the impact on their taxes and whether there are any tax planning strategies they should consider implementing this year.

ATA Partner Art Sparks Named Treasurer of State CPA Society

Arthur L. Sparks Jr.,CPA, of Union City, was recently elected treasurer of the Tennessee Society of Certified Public Accountants (TSCPA), the professional association for more than 9,000 CPAs residing and practicing in Tennessee. Sparks’ term began on June 13 at TSCPA’s 82nd Annual Convention and Leadership Conference.

Sparks is a partner with Alexander Thompson Arnold PLLC. He has been a member of TSCPA for 33 years, holding various leadership positions within the society, including service on the Finance Committee, TSCPA Council and as chair of the Peer Review Committee.

As treasurer, Sparks will serve on the TSCPA Board of Directors and Council, which is the governing body of the association and establishes policy for all society activities. He will also concurrently serve as a member of the Board of Trustees of TSCPA’s Educational & Memorial Foundation, which provides comprehensive continuing education for CPAs and awards academic scholarships to deserving accounting students attending Tennessee’s colleges and universities.

For over 30 years, Sparks has dedicated his life to providing quality accounting services.  He has been a partner with Alexander Thompson Arnold CPAs since 1980, where his practice focuses on auditing and quality control systems.  He is a former board member for the State Board of Accountancy; is an active member of the American Institute of CPAs where he has served as a Peer Review board member and chairman of the Oversight Task Force; and has also served in all offices of the West Tennessee Chapter of TSCPA.

Members of TSCPA work in all areas of accounting including public accounting, education, government, business and industry. TSCPA is headquartered in Brentwood, Tenn.

Alexander Thompson Arnold PLLC is a regional accounting firm that offers its clients the resources and expertise of a large firm and the personalized service of a small firm. The firm has 15 partners and approximately 140 staff members and offers a complete range of accounting, auditing, tax, and consulting services to a diverse portfolio of clients. Its offices are located in Dyersburg, Henderson, Jackson, Martin, McKenzie, Milan, Paris, Trenton and Union City, Tennessee and Murray, Kentucky. Each office reflects the community it serves and gives exceptional personal attention to its clients.

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Don Engelhardt, CPA joins ATA Team

Alexander Thompson Arnold CPAs is proud to announce that Don Engelhardt, CPA has joined its team. He is a principal in the firm’s Dyersburg, Tennessee office.

“During his 24 years in the accounting field, Don has demonstrated his hard work ethic and high professional standards. Both qualities complement ATA’s client-centered, excellence-driven focus,” said Al Creswell, CPA and chief manager for Alexander Thompson Arnold PLLC. “We are proud to have Don on our team.”

Engelhardt has worked hard in the accounting industry and has earned professional respect in the region. His practice focuses on governmental audits, for-profit audits, and individual and business tax, and his experience includes compilation and reviews, SSAE 16/SAS 70 internal control audits, cost analysis and business consulting. A graduate of Southeast Missouri State University, Engelhardt is a member of the Tennessee Society of CPAs and the American Institute of CPAs.

A native of Caruthersville, Missouri, Don and his wife Carrie have two children: Pressli and Jack. He enjoys spending time with his family and playing golf. He is a member of First Christian Church in Dyersburg, is active with the Dyersburg Chamber of Commerce and serves on Christ Classical Academy’s finance committee.

Alexander Thompson Arnold PLLC is a regional accounting firm that offers its clients the resources and expertise of a large firm and the personalized service of a small firm. The firm has 15 partners and approximately 140 staff members and offers a complete range of accounting, auditing, tax, and consulting services to a diverse portfolio of clients. Its offices are located in Dyersburg, Henderson, Jackson, Martin, McKenzie, Milan, Paris, Trenton and Union City, Tennessee and Murray, Kentucky. Each office reflects the community it serves and gives exceptional personal attention to its clients.

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Tennessee Tax Law Update

May 4, 2012  – Three bills were recently passed by Tennessee legislators and are important for you and your family. Governor Haslam is expected to quickly sign all three into law.

The first bill reduces the grocery tax from 5.5% to 5.25%. This bill, which passed unanimously, is scheduled to take effect on July 1.

The second retroactively repeals the Tennessee Gift Tax effective January 1, 2012. Currently, this tax applies to gifts over $13,000, and the tax rate ranges from 5.5% to 16%.  The federal gift tax exemption is $5.12 million, so you will have significant opportunities for gifting in 2012. Once the bill is signed into law, Connecticut will be the only state to impose this tax

The last one phases out the Tennessee Inheritance Tax by increasing the exemption and will completely eliminate it on January 1, 2016. Currently, this tax is levied on estates greater than $1 million.  The schedule for the phase out is:

2012 – $1,000,000 exemption
2013 – $1,250,000 exemption
2014 – $2,000,000 exemption
2015 – $5,000,000 exemption
2016 – Full Repeal

If you have questions about any of these tax laws, please contact the ATA office near you. Our partners would be happy to talk with you about them.

Alexander Thompson Arnold PLLC Named
6th Largest Accounting Firm in Tennessee

Alexander Thompson Arnold CPAs has been named Tennessee’s sixth (6^th) largest accounting firm by American City Business Journals. This ranking is based on the number of full-time certified public accountants with the firm. The firm is ranked eighth (8^th) for total staff in Tennessee.

With 15 partners and approximately 140 other staff members, Alexander Thompson Arnold PLLC (ATA) is a regional accounting firm with offices throughout West Tennessee and Western Kentucky. ATA offices are located in Dyersburg, Henderson, Jackson, Martin, McKenzie, Milan, Paris, Trenton and Union City, Tennessee; and Murray, Kentucky. Each office reflects the community it serves and gives exceptional personal attention to clients.

“People are often surprised by how large our firm is, but ATA is not your typical large accounting firm,” said ATA’s Chief Manager Al Creswell, CPA. “While we offer the resources and expertise of a large firm, we deliver very personalized service that is customer-focused and excellence-driven. Basically, our team values you and works hard to help you succeed! We believe this unique approach is why we continue to grow.”

Since its inception in 1946, ATA has provided tax, accounting, auditing, business valuation, employee benefits plan audit and administration, and consulting services to individuals and organizations of various sizes includingfinancial institutions, governmental entities, utility systems, not-for-profits, construction companies, healthcare providers, and a variety of private and public companies. The primary focus in providing these services is to help its clients be successful, achieve their missions and maintain financial accountability.

The firm is a member in good standing of the American Institute of Certified Public Accountants, the Tennessee Society of Certified Public Accountants, the Kentucky Society of Certified Public Accountants, the Private Companies Practice Section of the AICPA, and the BDO Seidman Alliance.

ALEXANDER THOMPSON ARNOLD CPAs ANNOUNCES STAFF ENHANCEMENTS

To celebrate growth and improve efficiency, Alexander Thompson Arnold CPAs has announced some staff enhancements.

Gil Fletcher has joined ATA as its new Director of Business Development. He will work in the Jackson office. A UT Martin graduate, Gil has retired twice: from a 33 year career in the banking industry and from a 3 year career as the Executive Director of the Humboldt Chamber. Utilizing his business experience, his efforts will compliment the firm’s relationship-focused marketing efforts to develop new business opportunities. He is married to ATA Principal Judy Fletcher.

Several team members have also received promotions for their hard work and dedication. They include:

• Melanie Berry, CPA and Julie Travis, CPA have been promoted to Senior Manager,
• Gabrielle Lorbiecki, CPA and Shelley Swearingen, CPA have been promoted to Manager; and
• Chloe Humphrey is now a Senior Accountant.

“ATA continues to grow because we have such qualified and passionate team members,” said Al Creswell, CPAand Chief Manager, Alexander Thompson Arnold CPAs. “It’s my privilege to welcome Gil to our team and to recognize these individuals who are being promoted. These announcements reiterate our commitment to showing respect for our clients and staff and to striving for excellence in the accounting field.”

Alexander Thompson Arnold CPAs is one of the largest accounting and consulting firms in the Mid-South and was named the seventh largest accounting firm in the State of Tennessee by American City Business Journals in 2011. Founded in 1946, ATA offers a comprehensive array of tax, audit, accounting, consulting, and wealth management services. With offices located in Dyersburg, Henderson, Jackson, Martin, McKenzie, Milan, Paris, Trenton and Union City, Tennessee and Murray, Kentucky, ATA has 16 partners and approximately 140 team members.

Click here to read more news from ATA.

Alexander Thompson Arnold CPAs Announces Employee Promotions

February 29, 2012

Alexander Thompson Arnold CPAs is proud to announce its staff members who have earned promotions.  They include:

• Robin Russell, CPA (McKenzie, Tenn.) and Kim Wilson, CPA (Murray, Ky.) have been promoted to Senior Manager
• Karie Spencer, CPA (Milan, Tenn.) and Regina Cooper, CPA (Jackson, Tenn.) are now Managers
• Gabrielle Lorbiecki, CPA (Paris, Tenn.); Brittany Kissell, CPA (Union City, Tenn.); Josh Bard, Katie Blankenship and Russell Cook (all from Jackson, Tenn.) have been promoted to Senior Accountant

“ATA team members dedicate themselves to providing the highest quality accounting and auditing services to our clients,” said Al Creswell, CPA and Chief Manager, Alexander Thompson Arnold CPAs. “We are proud to recognize these individuals as they excel as leaders within the firm and as professionals.”

Alexander Thompson Arnold CPAs is one of the largest accounting and consulting firms in the Mid-South and was named the seventh largest accounting firm in the State of Tennessee by American City Business Journals in 2011. Founded in 1946, ATA offers a comprehensive array of tax, audit, accounting, consulting, and wealth management services. With offices located in Dyersburg, Henderson, Jackson, Martin, McKenzie, Milan, Paris, Trenton and Union City, Tennessee and Murray, Kentucky, ATA has 15 partners and approximately 140 team members.

Pass Those Tests

Unless your 401(k) plan has adopted a “safe harbor” design, is a SIMPLE 401(k), or contains a qualified automatic contribution arrangement (QACA), you must perform the actual deferral percentage (ADP) nondiscrimination test each year.

The ADP test compares the average rate at which highly compensated employees defer salary with the average deferral rate for nonhighly compensated employees. The difference between the highly paid and the lower paid employees must be within certain defined limits. If it isn’t, you must correct the excess contributions made by the highly compensated employees.

Correcting Excess Contributions

You have three basic correction options. The first is to refund the excess contributions. While refunds can be made anytime within 12 months of the close of the plan year, a 10% excise tax applies to excess contributions not returned within 2 and a half months after plan year-end. With either option, the amounts will be taxable to the employees.

If allowed by the plan, an excess contribution made by an employee who is age 50 or older may be treated as a catch-up contribution, to the extent the employee hasn’t already made the maximum allowable catch-up contribution for the year. This treatment avoids the need to recharacterize or refund the excess amount.

The third option is to make additional qualified nonelective contributions (QNECs) or qualified matching contributions (QMACs) to nonhighly compensated employees. Such contributions will be treated as elective contributions for ADP testing purposes until the plan satisfies the nondiscrimination test.

Ways To Avoid Failure

If your plan has failed the ADP in the past or is likely to this year, you might want to look at adding automatic enrollment and automatic contribution escalation features to your plan (see “Automate Your Plan”). Both of these features are proven to increase plan participation by lower paid employees.

Alternatively, or in addition to adding these plan features, you may want to ramp up your employee education efforts to reach lower paid and nonparticipating employees. Some approaches to consider: a targeted, personalized campaign of e-mails and/or paycheck stuffers stressing the benefits of participating in your plan, mandatory enrollment/education seminars on company time, posters in areas/departments with high concentrations of lower paid employees, and small prize incentives for attending retirement education/enrollment seminars or enrolling.

Studies show that offering matching contributions usually increases plan participation. If you don’t currently offer a match or you discontinued your match during the recent economic downturn, consider offering one or bringing your company match back. Lower paid employees are often the ones most influenced by matching dollars. Those who participate frequently contribute up to the employer matching percentage. Consequently, changing your match structure from 50% on the first 4% of pay to 25% on the first 8% of pay could increase participant contributions without increasing your monetary outlay.

If you think your plan is in danger of failing the nondiscrimination tests, talk with Jerry Smith. He will help you analyze your options, including adopting a safe harbor plan design.