Search Results for: college

CPA vs. Tax Preparer: What’s the Difference?

by

Once the calendar flips to a new year (and you’ve barely had a chance to recover from the busy holiday season), Uncle Sam will come knocking at your door to get his share of your taxable income.

Tax season will be here before you know it. But unless you’re a mathematical savant who revels in the joy of crunching numbers and interpreting tax laws, chances are you lean on the sturdy shoulders of a tax professional.

While both Certified Public Accountants (CPAs) and tax preparers are professionals authorized to prepare and file tax returns, their training, certifications, expertise and scope of services vary greatly. So who’s the right candidate?

Here’s a quick rundown to help you hire the ideal tax professional:

Tax preparer

Tax preparers have no college degree requirement, and many lack tax-specific training. In fact, the only pre-requisite for obtaining the required (PTIN) to file taxes on your behalf is the completion of a simple form — one that takes about 15 minutes to fill out.

Why choose a tax preparer? If you or your small business only need assistance filing simple tax returns, they’ll typically apply the most common deductions and tax credits to your return — things like deductions for educational expenses and health care costs, as well as earned income or retirement tax credits. But what they may not do is research more unusual tax credits and deductions.

You can count on them to:

  • Collect relevant financial records and input applicable tax data
  • Determine basic deductions, refunds and payments using federal state and local tax laws
  • File documents with the IRS
  • Offer best steps to take to reduce your tax liability for the coming year

CPA

CPAs, on the other hand, must undergo extensive education and ongoing training to obtain their certification and ensure they’re responsible fiduciaries:

  • Completion of bachelor’s degree program, including 150 credit hours with a concentration on accounting, business and general ed
  • Passing of the AICPA (American Institution of Certified Public Accountants) exam, covering business concepts; accounting and reporting; auditing and attestation and regulations, within 18 months of completing their undergrad degree
  • Licensure by their individual state(s)
  • Annual completion of 40 hours of continued education

Because they have advanced training, CPAs are authorized to represent their clients before the IRS. They also tend to have greater insight into complex tax positions and are well-equipped to assist clients well beyond the tax return, with investments, audits and financial planning.

In addition, CPAs can provide the following services:

For individuals:

  • Estate planning expertise
  • Wealth preservation
  • Budget management and analyses
  • Investment strategy and asset allocation
  • Charitable giving strategies

For businesses:

  • Bookkeeping duties
  • Forensic accounting
  • Cost segregation analyses
  • Financial reporting
  • Audit and assurance services

The choice between a CPA and a tax preparer depends on your unique financial circumstances. Whether you’re a self-employed individual seeking comprehensive financial guidance, a growing business that could benefit from tax planning, or a salaried executive with stock options, there is a professional who can meet your needs.

If you’re looking for a trusted CPA, the professionals at Magone & Company will consider every deduction, break and incentive in preparing your return. Call us today at (973) 301-2300 to schedule a confidential consultation.

CPA Firm Checklist: Choosing the Right Professional for Your Tax Needs

by

As a hardworking taxpayer, it can be challenging to navigate the complexities of the tax system, while ensuring you’re making the most of a favorable tax situation. That’s where a Certified Public Accountant (CPA) comes in.

What sets CPAs apart from other tax specialists? CPAs are licensed, certified professionals who have achieved specialized higher education and extensive training in tax laws, regulations and preparation. They’re also required to complete annual Certified Professional Education (CPE) to maintain their certification.

But does that mean a CPA is the right fit for you? Here are some factors to consider when choosing a tax professional:

Experience and specialization. How long have they been in practice? Do they have any additional certifications? How have they helped other clients with similar challenges? These factors can give you confidence in their ability to provide you with accurate and reliable tax advice. Ask for client testimonials and referrals to get a better sense of their track record and performance.

Look for CPAs who specialize in areas that align with your needs. For example, if you’re a dental practice owner, you may benefit from a firm with experience providing tax services to similar businesses in your industry.

According to Magone & Co client and business owner, Kristi T., “In addition to filing our tax returns, the advice and guidance they provide for my businesses at a CFO level is truly valuable. The team is professional, pleasant, knowledgeable and proactive to help me with my business needs.”

Communication. Effective communication is key to any professional relationship. You want a firm that values open and transparent communication, actively listens to your concerns, explains complex tax concepts in laymen’s terms, and provide personalized advice that’s tailored to your needs. (Remember, you’re not the tax expert; they are.)

Availability. Consider a firm’s responsiveness and availability. Are they prompt in returning your calls and emails? Do they schedule regular meetings to review your financial situation and discuss any changes? Is there a set timeline of when your needs will be met? It’s essential to make sure all parties are on the same page, so you feel assured they’ll be there to assist you.

Security. All CPA firms should have proven strategies and procedures in place to safeguard your personal information. Is there a secure process for uploading documents? Are there encryption systems to regulate access to the data? Be sure you have peace of mind knowing who has access to your files.

For example, Magone & Co client, Nadja D. shares, “I currently reside outside the U.S. and have to coordinate two tax returns. I love the process that they have in place as I can securely submit everything electronically, which is a huge help. It’s a very well-organized office.”

Pricing structure. Get a clear picture of the value a CPA firm delivers and your potential return on investment. Inquire about their pricing structure and services included in their fees. Does the firm wish to build an ongoing consultative relationship, or do they seem solely interested in transactional services such as tax return preparation?

Consider the value of a financial and tax team that knows your unique situation, understands your priorities, meets with you regularly and can proactively seek out opportunities to lower your tax burden and get you closer to your financial goals faster.

For example, if you fall into the “sandwich generation,” you may find yourself simultaneously caring for aging parents while putting kids through college. CPAs who also hold the CFP financial planning designation can help you sort out strategies that don’t put your own retirement at risk.

The bottom line

Look for a firm that treats you as more than just a number — one that has a genuine interest in serving you. We’d love to see if Magone & Company is the right fit for you, so reach out today for a consultation.

Campania Wealth VP Reaches Career Milestone with Professional Certification

by

Nicholas Magone, VP for Campania Wealth Management, has earned the designation of Certified Financial Planner (CFP®) from the Certified Financial Planner Board of Standards.

Campania Wealth Management is Magone & Company’s wealth management partner.

Long considered the gold standard for wealth managers, the six-hour CFP® exam tests a candidate’s ability to apply a wide range of financial planning knowledge in real-life situations. Of the 300,000+ financial advisors in the U.S., less than 30% achieve CFP® status.

“It’s akin to successfully passing the bar exam for attorneys,” says Campania Wealth President & CEO Nick Magone, himself a CFP®. “Just over half of candidates pass on their first attempt, and we’re proud to congratulate Nicholas on this career achievement.”

Nicholas has worked extensively in all facets of wealth management, from tax-efficient investment and estate planning strategies to college planning, life and long-term-care insurance, and lifestyle budgeting/retirement income generation. He also holds the designation of Chartered Retirement Plans Specialist (CRPS®).

Learn how Campania Wealth Management and Magone & Company work together on a holistic approach to financial wellness for individuals, businesses and families.

Securities Offered Through: TFS Securities Inc., Member FINRA/SIPC, A Full Service Broker Dealer located at: 847 Broadway, Bayonne, NJ 07002 • 201-823-1030. Investment Advisory Services Offered Through: TFS Advisory Services, a division of TFS Securities, Inc.

How 3 New NJ State Tax Deductions Work

by

Exciting news for Garden State residents who are struggling to pay for higher education! Relief is on the way through the New Jersey College Affordability Act.

Beginning in tax year 2022, three tax deductions are available to residents earning fewer than $200,000 a year.

1.     $10,000 in contributions are deductible through the NJBEST savings trust.

The first tax incentive is available to residents who participate in the New Jersey Better Education Savings Trust (NJBEST.) During the 2022 tax year, accountholders may deduct up to $10,000 in contributions that they make to their savings trust.

Plus, earnings from contributions to the NJBEST 529 College Savings Plan are not subject to federal income tax–provided funds are withdrawn for qualified higher education expenses, or up to $10,000 is paid toward principal or interest of a student loan.

Funds in an NJBEST account may also be invested, by the contributor, in portfolios that would meet the educational goals of the investor.

Depending on the market, this option can offer you significant advantages — especially if you’re walking the line between saving for a dependent’s higher education and saving for your retirement. Higher earnings in your NJBEST savings plan would, under some circumstances, allow you to add additional funds into a tax protected plan for your retirement. Consulting with an experienced tax expert will help steer you and your financial goals in the right direction.

2.     Up to $2,500 deductible in principal and interest for NJCLASS loans.

The second tax incentive offered by the state is the New Jersey College Loans to Assist State Students (NJCLASS.) It’s a loan program that’s used to shore up education expenses not covered by other aid, including Federal Direct loans.

NJCLASS loans are available to Garden State students who attend approved schools in- or out-of-state. The loans are also available to state students attending online classes or classes abroad. NJCLASS loans are also accessible to non-resident students attending an approved school in New Jersey.

Up to $2,500 of principal and interest paid on NJCLASS student loans may be deducted per year. Again, annual gross income must fall at or below $200,000.

3.     Up to $10,000 for in-state higher education costs.

The third tax deduction is for specific higher education costs for in-state schools.

State residents may deduct the cost of tuition, books, computers and other expenses associated with their higher education. The deduction may not exceed $10,000 and includes the costs of the taxpayer, a spouse or a dependent.

New Jersey Senator Sandra Cunningham (D-Hudson), Senate Higher Education Committee Chair was co-sponsor of the New Jersey College Affordability Act. According to Cunningham, “Our hope with this bill is that by providing tax incentives to families, we can assist with the financial burden they may incur sending a child to college.”

The bill was unanimously approved by the New Jersey Senate and signed into law in June 2021 for the 2022 tax year and beyond.

Check in with Magone & Co 

Saving for college isn’t easy — especially with the current economy and other financial demands, like assisting older parents or putting money away for your own retirement. Give us a call to see if our Family Advisory Services could be right for you.

Is the NJ brain drain dooming your organization’s future workforce?

by

Sure, the taxes may be high, but by and large the Garden State is an opportunity-filled place to live and work — especially for NJ-based companies that require a wide range of skill sets across their workforce.

But when we’re the only state losing 20,000+ students annually to out-of-state colleges, what’s the impact on future hiring? This so-called “brain drain” — high school students heading across state lines for their higher education — has been going on for decades. Combine that with the mass exodus of more than 500,000 millennials, and you don’t have to be an economist to predict the looming impact on the state’s labor pool — talent shortages, skilled positions going unfilled and costly retention issues as employees realize who’s in the driver’s seat.

This phenomenon is also expensive from a tax standpoint. New Jersey spends roughly $19,000 per student on K-12 education, landing it at the top of the list for per-pupil spending. That’s a steep investment in a future workforce that’s not guaranteed to stick around.

Why are so many students choosing to attend college elsewhere?
One reason is proximity, according to Joyce Strawser, Ph.D., dean of the Stillman School of Business at Seton Hall University. She says, “It’s so easy for a NJ high school graduate to enroll in a great university located within a two- to two-and-a-half-hour drive. That student may likely feel that he or she has the best of both worlds — the exciting opportunity to live and learn in another state, while maintaining the safety net of being a short drive or train ride from home.”

On the positive side, Strawser feels that the issue speaks to the quality of graduates the state produces. “Our high school students are academically competitive — attractive candidates who are heavily recruited by nearby colleges and universities.”

Shifting the tide to in-state higher education
In-state colleges are the first line of defense in attempting to reverse the talent exodus. And many, including Seton Hall, are getting creative in raising their profiles among high school students, moving beyond the typical “Open House” and hosting high-interest programs that bring these students to campus.For example, Strawser’s Stillman School hosts a half-day visit for Bridgewater-Raritan High School students twice a year — and has seen enrollments from that school district increase significantly as a result. Stillman also presents an annual “Strictly Business” program, a half-day immersive introduction to programs, faculty and students, during the New Jersey Education Association Convention.  “Because many of our high schools do not hold classes during the NJEA event,” she says, “it’s a convenient time for NJ students to visit our campus.”

Future-proofing your NJ workforce
If you’re planning on remaining an NJ-based company, now’s the time to think proactively about the future of your workforce. Though you can’t control where students choose to attend college, you can take steps like these:

  • Benchmarking —Examining both industry-specific and general market data can help you ensure your compensation and benefit packages are competitive or better.
  • Succession planning — Identify mission-critical roles across your organization and the skills necessary to succeed in them, then map out (or recruit, if you don’t find any) potential candidates to develop.
  • Organizational soul searching — What would it take to become known as an employer of choice? Whether that’s reinforcing your commitment to social responsibility, improving organizational culture or raising your profile by engaging a strategic PR firm, these tactics don’t yield results overnight. Start now so you’re positioned for success.

With so much home-grown talent and potential, it’s a tough loss to see other states — and their business communities — reap the benefits of NJ’s educational system. Our state is a difficult enough place to do business without the added stress of a workforce lacking the skills we need to remain competitive.

 

 

 

6 ways to prevent tuition reimbursement fraud

by

Every company’s been stepping up its benefits game to attract great hires. Tuition reimbursement pays you back two ways — it’s a high-value perk for job seekers, and investing in employee educationand training is crucial to your organization’s long-term success. However, these programs can also pose a fraud risk in ways that might surprise you. For example, in one recent case, four employees submitted more than $400,000 in fraudulent expense requests for college classes they never even enrolled in.

To avoid having tuition reimbursement benefits become more a liability than a benefit, consider the following steps:

1. Request original documentation. Most educational institutions provide a transcript and receipt for fees paid as well as a diploma if the employee earns a degree or certification. To help prevent the submission of fraudulent documentation, as well as multiple claims for the same expense, consider requiring original transcripts and receipts for fees paid. In addition, some employers request copies of canceled checks or credit card statements to verify that the payment for which the employee is seeking reimbursement was actually made.

2. Help managers with a structured approval process. To keep employees happy, managers may be tempted to “rubber stamp” approvals. Although the majority of tuition reimbursement requests are legitimate, failure to scrutinize claims can result in fraud. Managers should be given a checklist of documents to be submitted with each request, and have a contact person to go to with questions or concerns.

3. Allocate tuition reimbursement to department budgets. To increase accountability and encourage managers to closely review reimbursement requests, consider allocating education expenses to individual department budgets. The level of due diligence that managers perform tends to increase significantly if their departments are charged with the expense. However, you don’t want managers to discourage employees from taking advantage of training opportunities, so make sure the final decision to approve or deny a request rests with someone other than the department manager.

4. Pay the school directly if possible. Depending on the size of your organization and the number of employees who pursue further education each year, it may be a good idea to pay the learning institution directly. That way, your company won’t have to rely exclusively on the documents submitted by employees. In addition, you might be able to negotiate a discount for bulk payments. Paying an institution directly not only reduces the chances of employee fraud; it may also reduce your administrative costs as it involves less paperwork.

5. Reimburse expenses only for accredited schools. Unfortunately, the number of “diploma mills” has exploded in recent years. Establishing a policy to only reimburse for accredited schools can help eradicate tuition fraud as well as potentially increase the quality of education your employees receive.

6. Implement an employee hotline. When employees commit tuition reimbursement fraud, they may be tempted to share their success with co-workers. A hotline can provide employees with an anonymous method to share the information that can stop tuition reimbursement before losses mount.

Tuition reimbursement fraud is relatively easy to detect and prevent. And given the importance of educating and retaining motivated employees, preventing reimbursement fraud should be a priority for every organization.