IMPORTANT TAX DEADLINES AND CONTRIBUTION LIMITS FOR 2019

Tax Deadlines For Business Owners

1099 Forms due January 31, 2019

W-2 Forms due January 31, 2019

S-Corporation Tax Returns (Form 1120S) due March 15, 2019

Partnership Tax Returns (Form 1065) due March 15, 2019

Corporation Tax Returns (Form 1120) due April 15, 2019

Profit Sharing/Simple IRA and SEP IRA Contributions due March 15, 2019

S-Corporation Tax Returns (Form 1120S) with extension due September 16, 2019

Partnership Tax Returns (Form 1065) with extension due September 16, 2019

Corporation Tax Returns (Form 1120) with extension due October 15, 2019

Profit Sharing/Simple IRA and SEP IRA Contributions with extension due September 16, 2019

Tax Deadlines For Individuals

Individual Income Tax Return due April 15, 2019

Individual Income Tax Return with extension due October 15, 2019

Traditional IRA Contributions due April 15, 2019 – no extension is allowed

Roth IRA Contributions due April 15, 2019 – no extension is allowed

SEP IRA Contributions due April 15, 2019

SEP IRA Contributions with extension due October 15, 2019

Health Savings Account Contributions due April 15, 2019 – no extension is allowed

1st Quarter Estimated Tax payment for 2020 due April 15, 2019

2nd Quarter Estimated Tax payment for 2020 due June 17, 2019

3rd Quarter Estimated Tax payment for 2020 due September 16, 2019

4th Quarter Estimated Tax payment for 2020 due January 15, 2020

Contribution Limits

Traditional and Roth IRA if you are under age 50 – $5,500 for 2018 and $6,000 for 2019

Traditional and Roth IRA if you are over age 50 – $6,500 for 2018 and $7,000 for 2019

*Note – Income limitations apply

SEP IRA – $55,000 for 2018 and $56,000 for 2019

*Note – limited to 25% of self-employed income

Health Savings Account – $3,450 for self-only coverage plus additional $1,000 if you are over age 55 for 2018 and $3,500 for 2019 plus additional $1,000 if you are over age 55

Health Savings Account – $6,900 for family coverage plus additional $1,000 if you are over age 55 for 2018 and $7,000 for 2019 plus additional $1,000 if you are over age 55

For a complete list of monthly tax due dates, visit our tax center. Our team of experts can stay on top of the due dates for you, so you never miss a filing date. Give us a call to set up your consultation: 407-680-9088.

Financially Fit in 2019

We usually associate New Year with a new beginning, a fresh start which is often followed by New Year’s resolutions – we set goals to loose weight, get physically fit, visit new destinations, spend more time with family and friends, etc. What about personal financial goals? Should one of your New Year’s resolutions be to get financially fit?

For many, financial planning is a daunting task and a general consensus is that it will restrain one’s life. It is true that becoming financially fit will require discipline and consistency but in the end it will actually translate into a peace of mind, security and freedom. Financial freedom is a very powerful thing as we all know that financial struggles lead to enormous stress, constant worries and disagreements with our loved ones.

I will not tell you that you will become a millionaire in six months or that you will pay no taxes on your income but I will tell you that you can start with these five steps that will get you a lot closer to your financial freedom.

This is Part I of the series for complete financial transformation.  

  1. Get your picture crystal clear

Understand what position you are in today so you can plan wisely for your future – list all your assets and liabilities. In simple terms – assets are what you own and liabilities are what you owe to others. This is the most important exercise so don’t cheat yourself.

A. Assets will include:

i. Bank accounts (checking, savings, money market)

ii. Investment accounts (brokerage accounts such as E-Trade, Scottstrade, Fidelity, Vanguard, etc.)

iii. Real estate you own (fair market value as of the date of this exercise)

iv. Retirement accounts (IRA, Roth IRA, SEP IRA, 401K, 403B, etc.)

v. Stock you own if it wasn’t listed in your brokerage accounts above (restricted stock or stock options from your employer)

vi. Whole life insurance policies – only list cash surrender value, if any

vii. Tangible property such as automobiles, boats, jewelry, equipment, art – be careful with this as many people tend to “over value” their tangible property – what is your dining room table really worth if you had to sell it on E-Bay?

viii. Loans to family and friends

B. Liabilities will include:

i. Credit card debt, including department store cards

ii. Bank loans – lines of credit, vehicle and boat loans, other short term loans

iii. Student loans

iv. Mortgages on your primary home and rental properties, including HELOC loans

v. Loans against your retirement accounts

vi. Loans from family and friends

vii. Other commitments that may include pledges to church or charity

viii. Unpaid tax liabilities – income taxes and property taxes

ix. Unpaid child support or alimony

2. Understand your spending habits

A. Obtain last 6 months of your bank statements and credit cards statements

B. Categorize all expenditures into these categories:

i. Mortgage or rent payments

ii. House maintenance and repairs

iii. Insurance – homeowners, auto, boat, general liability, disability, health and life

iv. Utilities

v. Groceries

vi. Clothing

vii. Child care – tuition, after school program, summer camps, sports, dance, etc.

viii. Loan payments other than mortgage – vehicle and boat loans, short-term loans and other

ix. Credit card payments

x. Entertainment and restaurants

xi. Gifts

xii. Travel

xii. Savings such as payments to your kid’s college funds, transfers to your brokerage accounts

3. Embrace a debt-free road

What I mean by debt-free does not necessarily mean no mortgages or loans whatsoever (of course its great if that is the case as well!) but more so getting rid off high interest credit cards and loans

A. Create a list of all your debt (mortgages, car loans, boat loans, student loans, credit cards, department store cards, private loans) in descending order listing highest interest rate borrowings first

B. Add columns/fields to each loan with the following information:

i. Balance owed

ii. Annual interest rate

iii. Minimum monthly payment

iv. Minimum monthly payment + 10% of the total balance owed

v. Minimum monthly payment + 20% of the total balance owed

C. Create a separate list with balances under $500

D. Read the steps in the next section for payment options

4. Create your personal budget

The success element of any budget is not creating one but sticking to it. If you are going to do this you will need to make a commitment to follow it.

A. Add your recurring monthly income to have the total available monthly cash

B. From the item #2 list pick out top 5 priority bills

C. Keep a running total of the cash balance remaining – total income less the monthly bills

D. From the item #3 list pick out top 3 most costly borrowings

i. Add Minimum monthly payment + 10% of the total balance owed

ii. If you are able to do it add 20% principal payment to the total balance owed

E. From the item #2 list pick out top 5 second priority items

F. Fet rid of 5 bottom monthly bills – I guarantee you can live without them

5. Identify your financial goals

Think about your short, medium and long-term goals. How much do they cost? Are you on track to meet them?

A. Some long-term goals, such as traveling in retirement, may not change substantially year to year. Short-term goals, such as paying off a credit card bill, and medium-term goals, including saving for a house, may change more frequently. You might decide to reevaluate those every three to six months

B. Aim to save at least 10% of your earnings to meet short-term and long-term goals

I know this is a lot of detail information that is boring to a person with no financial background but I also know that when someone reads an article about budgets there is no step-by-step direction on how to create one. I am an accountant by trade but I am also a person who once was divorced and broke at 26 years of age.  

I can’t change your life but I can give you powerful tools to use towards your journey to financial freedom. Give us a call today to start your way to financial freedom in 2019: 407.650.9088.

5 Tax Saving Tips Before the End of 2018

As the Holidays approaching rapidly, so is the end of 2018 tax year. Due to major tax reform enacted in 2018 there are a lot of unknown facts and circumstances that will be facing taxpayers this upcoming tax filing season. So what can you do in the next couple of weeks to minimize your tax liability?

Here are 5 tax savings tools that will give you the best bang for your buck:

1. Check your last paystub to make sure you are maxing out your 401K deferral – qualified retirement accounts savings is still one of the most tax advantageous tools for earned income taxpayers:

a. The limit for 2018 is $18,500 if you are 49 years old or younger and $24,500 if you are 50 years old or older;

b. If you are working for a company you can elect for a one-time larger 401K deduction up to the amount of your net paycheck

c. If you are self employed consider paying yourself a bonus that will allow you to contribute maximum amount to your 401K plan.

2. If you are considering “lending” money to your children think about selling stock that you owned for one year or more:

a. Taxpayers with joint income of $77,200 or less will pay zero capital gains tax;

b. Taxpayers with joint income between $77,200 and $479,000 will pay 15% capital gains tax.

3. Utilize your carryover capital losses – you are only allowed to deduct net loss of $3,000 on a joint tax return:

a. If you have capital losses from prior years and considering selling some of your holdings, complete the transaction before the year is over to utilize those losses and pay no tax on the gains;

4. New tax law allows for a $24,000 standard deduction for joint filer but some of you are still going to itemize if your deductions exceed that amount. If you are amongst those taxpayers that itemize consider maximizing your charitable contributions:

a. Donate appreciated stock – not only you won’t pay capital gains tax but also receive deduction for a full fair market value of the stock;

b. If you are over the age of 70 and a half and are required to take minimum distributions (“RMD”s) from your IRA but don’t need the money you can do a direct charitable contribution from your IRA. By doing that you will satisfy RMD requirement and get a deduction at the same time.

5. If 2018 was a low income year for you consider conversion of your traditional IRA to a Roth IRA

a. Taxpayers that are in a low tax bracket will pay minimal taxes on the conversion and the money in your Roth IRA will be tax free when you take it out at the age of 59 and a half.

Even with only two weeks left until the end of the year don’t shy away from contacting your tax advisor who can provide you with a valuable tax savings advise based on your individual situation.

For more information on how we can get your taxes in good shape for filing, give us a call:  407-650-9088.

Estate Planning for the Non-Resident Alien With U.S. Assets

Estate Planning for the Non-Resident Alien With U.S. Assets

By:  Adam Kirwan
The Kirwan Law Firm
301 N. Ferncreek Avenue, Suite C
Orlando, Florida 32803
kirwanlawfirm.com

When a Non-U.S. Citizen purchases property in the United States or spends a portion of the year within U.S. borders they become subject to a myriad of complex U.S. tax laws. These laws tax the individual with respect to (i) income earned within the United States and sometime abroad, (ii) certain transfers made with respect to U.S. Situs Property (the definition of which can be complex and is described in greater detail below) and even Non-U.S. Situs Property in certain circumstances, and (iii) property owned by a Non-U.S. Citizen at death. In addition, U.S. tax laws exist that tax property held in corporations, partnerships, limited liability companies, and trusts. These laws present many pitfalls for the unweary, however, the individual who plans properly can reduce or avoid taxation to a significant degree. This memo provides a brief overview of the United States estate and gift tax laws (sometimes called “transfer tax” laws) as they apply to Non-U.S. Residents and how proper planning can reduce estate taxes as well provide many non-tax benefits.

Overview of US Estate and Gift Taxation of Non-Resident Aliens

U.S. transfer taxes (estate, gift, and generation skipping taxes) are triggered by one of two things (1) jurisdiction over the person or (2) jurisdiction over the property. Each of these are explained below.

Jurisdiction Over the Person

Transfer tax jurisdiction over the person arises where an individual is either (1) a U.S. citizen or (2) a U.S. resident. An individual is a U.S. citizen if he or she was either born in the U.S. or naturalized in the U.S. In addition, if an individual was born outside the U.S. but has any U.S. citizen parents or grandparents that may confer upon that person the right to U.S. citizenship, such a person may be treated as a citizen.

If an individual is not a U.S. citizen, the IRS will only have jurisdiction over the person for estate tax purposes if he or she is a resident of the US. For estate tax purposes, the term “resident” is NOT defined using the “substantial presence” test used for income tax purposes (i.e., a foreign individual is classified as a US resident alien if he or she spends 183 days or more in the United States during the taxable year or as determined under a special “lookback” formula). Instead, whether someone is a US resident for estate tax purposes hinges on whether that person is “domiciled” in the U.S. Domicile is generally determined by a two-part test. The first part of the test asks whether the person is living in the US If they are living in the US, the second part of the test asks whether they intend to remain living in the US If both of these questions are answered in the affirmative, the person is a resident for US estate tax purposes. It is interesting to note that under this test, an individual may be a resident of the US for estate tax purposes even if the taxpayer does not have the legal right to live in the US Likewise, an individual may be a resident of income tax purposes, but not estate tax purposes.

Jurisdiction Over the Property

If a person is not subject to estate tax due to their status as a US citizen or a US resident, the US estate tax will only apply to that person’s “US Situs Property.” Not surprisingly, US Situs Property is a property that has “situs” in the United States; however, as you will see in the explanation set forth below, the term “situs” does not simply refer to property physically located in the United States. In fact, some property that is physically located in the US is not US Situs Property for estate tax purposes. Below are several examples of “US Situs Property.”  Please understand that this list is not exhaustive and that under different fact patterns, a property that would normally be classified as U.S. Situs Property may be classified as Non-US Situs Property and vice-versa.

Examples of U.S. Situs Property include the following:

1. Real Estate: Real property located within the United States. This includes buildings, improvements and fixtures. A harder question is whether US Situs Property includes interests in real property, such as leases, mortgages, or other interests secured by real property located within the United States. A determination of whether a lease, mortgage, or other similar interest would be classified as US Situs Property would require an examination of legal documents and the specific facts and circumstances surrounding the creation of the interest.

2. Debt: The general rule is that a debt of a US person or US government has a US situs. A US person means an individual who resides in the US or a corporation incorporated in the US These rules apply whether the debt is in the form of a bond, debenture, promissory note, trade payable or otherwise and whether written or oral. An exception to this rule is deposits with US banks, which are generally treated as having a situs outside the US There is also an exception for certain “tax-free” bonds issued by specific governmental agencies.

3. Life Insurance: Life insurance proceeds paid by and amounts left on deposit with US insurance companies, while clearly US situs under the general rules, are generally treated as Non-US Situs Property.

4. Interests in Corporations: The general rule is simple – shares of a US corporation are deemed situate within the U.S. and shares of a foreign corporation are deemed situate outside the US The location of the stock certificates and the location of the transfer agent are irrelevant. However, where a foreign corporation owns property that has a US situs, for the shares of the corporation to be treated as foreign situs, the corporation must be recognized for tax purposes. The leading case in this area is Moline Properties v. Commissioner. That decision has been interpreted to mean that a corporation’s separate existence (and, therefore, its status as Non-US Situs Property) would be recognized if (1) there is a real non-tax business reason for the existence of the corporation, or (2) the corporation conducts the actual business activity.

5. Interests in Trusts and Estates: If an individual taxpayer has control over trust assets, whether through a right to revoke the trust or through certain powers conferred upon a trust beneficiary (such as a general power of appointment or reversionary interest), that person will be deemed to own the trust assets directly. In that case, the situs of the trust assets becomes the deciding factor.

6. Interests in Partnerships: The situs of a partnership interest requires an examination of where the partnership does business, the jurisdiction under whose laws the partnership is organized, and the jurisdiction where the general partner is located.

7. Tangible Personal Property: The physical location of tangible personal property determines its situs. However, there is some authority that mere physical presence in the U.S. at the time of death is not determinative where the taxpayer was in transit such that the property had not actually come to rest in the U.S. There is also an exception for works of art that are on exhibit in the United States.

Overview of U.S. Estate and Gift Taxes

Estate Tax

The U.S. estate tax is imposed by Internal Revenue Code and collected by the Internal Revenue Service. It is imposed on (i) the worldwide property of U.S. citizens or residents, (ii) certain U.S. property of nonresident former citizens, and (iii) certain U.S. property of other nonresident aliens. In each case, the property subject to estate taxation (called the “gross estate”) includes property owned by the deceased at death as well as certain property that was either used or formerly owned by the deceased. Once the estate tax is calculated, the estate of the deceased is entitled to various deductions and credits to reduce the gross tax liability. While this topic is too broad to discuss in any detail, the principal credit allowed a non-resident alien is a tax credit (called the “Unified Credit”) which shelters $60,000 from U.S. estate tax. The Unified Credit for a citizen or resident alien currently (i.e., as of 2018) allows $1,180,000 to be sheltered from U.S. estate tax. Significant differences in the marital deduction also exist when property is left to a non-U.S. citizen.

EXAMPLE:
Assume that you and your spouse purchase a residence worth $800,000 and title it in your joint names. Assuming you are both non-resident aliens, when you die, roughly $121,800 is due in estate tax despite the fact that it is passing to your spouse. When your spouse then dies owning the same property years later, another $121,800 is due (assuming you didn’t have to sell the house to pay the estate tax). As you can see, in this very common situation, the estate tax can be significant (in this example, $243,600.00 or over 30% of the property’s value). Note that the highest estate tax rate is a full 40%!

Gift Tax

The U.S. also has a gift tax. You will be happy to learn that the definition of what constitutes U.S. Situs Property (and, therefore, the property subject to the gift tax) for gift tax purposes is narrower than the definition for estate tax purposes. The gift tax applies only to gifts by nonresident aliens of real property or tangible personal property located in the United States. Gifts of intangible personalty (such as interests in corporations) are not subject to gift tax (but are subject to the estate tax). As of 2018, nonresident aliens are entitled to an exemption for gifts of $15,000 per year for each recipient. With respect to gifts to a non-resident spouse, however, an exemption of $152,000 per year is allowed (again, as of 2018).

There is another U.S. transfer tax called the Generation Skipping Tax which taxes certain transfers made to grandchildren and other more remote beneficiaries. This tax can be quite complex and presents many traps for the unwary when drafting trusts even when children (not grandchildren) are the intended beneficiaries. A discussion of the Generation Skipping Tax is beyond the scope of this letter, but you should be aware of its existence.

Planning

Basic Planning:

Basic planning begins by implementing a revocable trust to hold US Situs Property. The revocable trust provides many benefits including:

(i) Basic Tax Planning: A revocable trust can be used to ensure that both spouse’s tax credits are fully used and that property passing to a Non-US Citizen spouse qualifies for the marital deduction so that no estate tax will be payable on the death of the first spouse to die.

(ii) Probate Avoidance: Probate is a costly, time-consuming process where the disposition of your US Situs Property is supervised by a United States court. The process becomes an even larger burden on your family when they are not present in the United States to oversee the process. Since assets held in a revocable trust are not subject to probate, your children and/or other family members are saved the time, inconvenience, and expense of having to deal with this process at a time when they have just lost a parent.

(iii) Proper Disposition of Your Assets: The use of a revocable trust ensures your assets pass to the people, and in the manner, you desire.

(iv) Privacy: Since you act as both a trustee and the beneficiary of the trust, you gain increased privacy with respect to the nature and extent of your US assets, while still maintaining complete control. The trust is never filed with any court or state or federal agency to make it effective.

(v) Guardianship Avoidance: Absent proper planning, in the event you become disabled while owning property in the United States, your family members will not be able to manage that property for you without establishing a formal guardianship. Guardianship, like probate, is a costly, time-consuming process where a US court first determines who should manage your assets (called a “Guardian”) and then supervises the Guardian by requiring him or her to report to the court on an ongoing basis. Assets held in a revocable trust are instead managed by the people you name as your successors with no involvement of a U.S. court.

(vi) Reducing Future Taxes: Gifts of US Situs Property left to your descendants when you die can be structured so that your children will not have to pay estate tax with respect to the gifted property when they pass on.

(vii) Increased Asset Protection: Gifts of US Situs Property left to your descendants when you die can be structured to protect those assets from the reach of your children’s creditors, including divorcing spouses.

In addition to a revocable trust, your basic estate plan should also include creating a Durable Power of Attorney, a Health Care Power of Attorney, and a Living Will, all drafted under the laws of the United States. A Durable Power of Attorney provides for another person (usually your spouse, a family member, or trusted friend), called an “Attorney-in-Fact,” to be able to act on your behalf in the event you become disabled. In addition to powers to manage assets, a durable power of attorney grants your Attorney-in-Fact the right to exercise your legal rights including the power to sign contracts and tax returns.

A Health Care Power of Attorney allows you to name someone to make health care decisions on your behalf in the event you are unable. A Living Will allows you to state whether you would want life support removed in the event two doctors determine you have not a medical probability of recovery. Both of these documents are recognized by United States hospitals and health care providers and ensure that your wishes are respected and carried out and that people you trust are legally able to make important health care decisions for you in the event you are disabled or injured.

Additional Planning:

While the use of a revocable trust does provide some tax planning, its use alone will not significantly reduce estate taxes. There are many tools to facilitate planning by non-resident aliens to eliminate or reduce estate taxation; however, the planning requires (i) a thorough examination of your assets both here and abroad, and (ii) a clear understanding of your overall estate plan including any plan established under the laws of your country of origin.

One of the principal planning techniques is to restructure US Situs Property in order to convert it to Non-US Situs Property. This often involves creating both US and foreign situs limited liability companies to hold property and/or using equity stripping techniques to remove equity from certain assets which are then converted to Non-US Situs. Oftentimes, property located within US borders will qualify as Non-US Situs Property. If possible, it is best to establish your estate planning structure before you purchase US property as the cost of transferring interests in real property often time trigger Florida Documentary Stamp Tax.

Since advanced tax planning of this nature is complex and highly fact-specific, it is impossible to go into great detail without discussing your particular situation and goals. Please understand that the information contained in this memo is merely an overview of a complex area of law and that you should not rely on this information without first seeking my advice or the advice of another attorney qualified in this area of the law. If you are interested in implementing additional planning to avoid U.S. estate tax, please let me know at your earliest convenience. I can be reached at (407) 210-6622.

Dalia Cantor Earns Certified Valuation Analyst Credential

The Certified Valuation Analyst (CVA) designation is the only valuation credential accredited by the National Commission for Certifying Agencies (NCCA), the accreditation body of the Institute for Credentialing Excellence (ICE).

Orlando, FL (November 6, 2018) – Dalia Cantor, CPA, with the firm of CPASolutions, has successfully completed the certification process with the National Association of Certified Valuators Analysts® (NACVA®) to earn the Certified Valuation Analyst® (CVA®) designation.  The CVA designation is granted only to individuals who have met a high bar or both prerequisite qualifications and passed a substantive examination testing both understanding of theory and the application of skills in the field of private company business valuation.

“The CVA designation is an indication to the business, professional, and legal communities that the designee has met NACVA’s rigorous standards of professionalism, expertise, objectivity, and integrity I the field of performing business valuations, and the attendant financial consulting related to the discipline,” state Parnell Black, MBA, CPA, CVA, Chief Executive Officer of NACVA.

“NACVA’S CVA designation is the only valuation credential accredited by the National Commission for Certifying Agencies® (NCCA®), the accrediting body of the Institute for Credentialing Excellence™ (ICE™),” Black added.

To become accredited by NACVA, candidates typically have completed intensive training.  An initial requirement to becoming a CVA is that the applicant either be:  1) a licensed Certified Public Accountant (CPA) holding an active, valid, and unrevoked CPA license in his or her state; 2) or hold a business degree and/or master of business administration (MBA), or higher degree from an accredited college or university, and have two years or more of full0time (or the equivalent of) experience in business valuation and/or related disciplines.  Those who have earned the CVA credential must recertify every three years in order to maintain their credential.

For more information about CPA Solutions’ business valuation, accounting, financial consulting, and related consulting services, contact Dalia Cantor, at 407-650-9088 or via e-mail at Info@MyCPASolutions.com.

About CPA Solutions

CPA Solutions is a full-service accounting firm dedicated to helping clients reduce cost, improve service and manage risk.  The firm offers a broad range of services for business owners and medical professionals in three convenient locations: Downtown Orlando, Celebration & Avalon Park.  For more information on CPA Solutions, visit www.MyCPASolutions.com or call 407-650-9088.

About the NACVA

The National Association of Certified Valuators and Analysts (NACVA) is a global, professional association of over 7,000 members that delivers training and certification in consulting fields such as business valuation, financial litigation forensics, expert witnessing, forensic accounting, mergers and acquisitions, business and intellectual property damages, healthcare consulting, and exit strategies.  NACVA is a member of the Institute for Credentialing Excellence (ICE).  NACVA’s Certified Valuation Analyst (CVA) designation is the only valuation credential accredited by the National Commission for Certifying Agencies (NCCA), the accrediting body of the Institute for Credentialing Excellence.  Other professional certifications offered by NACVA include the Master Analyst in Financial Forensics® (MAFF®) and the Accredited in Business Appraisal Review™ (ABAR™) designation.  Visit www.NACVA.com to learn more.

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Revenue Cycle Management – Best Practices to Collect Your Accounts Receivable

Revenue Cycle Management
Best Practices to Collect Your Accounts Receivable

Efficient billing and collections in your accounts receivable are critical to the success and profitability of your practice, and any efforts you make to improve efficiency can help you better capture money you earn and avoid your leaving money on the table. Below are 10 benchmarks to target for your operations and then offer 10 best practices to make meeting these benchmarks a reality.

Benchmarks

Use the following 10 benchmarks as good targets to consider for your practice.

  1. Days in A/R. 20 to 35 days for practices conducting mostly electronic billing, which includes submitting electronic patient statements.
  2. Insurance verification.  Completed within three to five days before the date of service. You don’t always get an authorization at the moment when you make that call but as soon as insurance verification is completed, you need to turn around and call patients to notify them of their responsibilities, at least three to five days prior to their date of service.
  3. Transcription.  Completed within 24 hours or less after the patient visit.
  4. Coding.  Completed within 48 hours or less. The claim should also go out the door the same day the case is coded and charged.
  5. Claims billed out.  Completed within 24 to 72 hours from date of service with the higher-end target to account for possible delays caused by issues such as time needed to resolve any discrepancies concerning procedure information or slow dictation from doctors, but 72 hours should be the exception and not the rule. You may want to consider a more aggressive benchmark — with the understanding that occasional issues will hold up the process — and target to have claims sent out within 24 hours.
  6. Claims follow-up.  Completed within 28 days for those that remain unpaid. All claims need to be touched, again, at least every 28 days until the claim is resolved. For practices filing mostly electronic claims, you may want to keep that benchmark lower. If you know you’re getting paid every ten days from a payor, then you should have a 15-day review if you haven’t received payment.
  7. Denial rate.  1 to 2 percent. Tracking the reason you are not getting paid the first time a claim is billed is very important, you need to identify the reason for denial and fix whatever the problem might be so that future claims will be paid the first time you bill, which will reduce the expense associated with claim filing and give you access to your cash that can be used for other expenses.
  8. Accounts per collector.  When reviewing your outstanding A/R, you should have one biller assigned per every 800 accounts, with the business office manager monitoring the collection activity closely to ensure accounts are being worked at a minimum of every 15 to 30 days. If your practice has 2,400 outstanding accounts, and a biller can only follow up on about 800 accounts per month or 40 accounts per day you would need three billers to work through the entire receivable in one month.
  9. Cash collections as a percent of net revenue.  At a minimum, the collection goal should be 100 percent of your monthly average net revenue for the preceding three months. Track and trend this goal monthly, and if you are short in your overall collections for the month, the collection shortfall should be added into the next month’s collection goal.
  10. Aged A/R greater than 60 days and aged A/R greater than 120 days.  Less than 25 percent of your A/R should be in the 60-day bucket and less than 10 percent in the 120-day bucket.

Best Practices

Here are 10 best practices you can use to help meet your benchmarks and improve your overall efficiency.

  1. Post your targets. A terrific motivator for staff members is to put their goals on display and reward them when meet or beating the targets.  Post goals and targets for the employees in your office such as monthly cash collections goal; front-end collections goal (percentage) and business office goals. If the staff meets the goal, reward them.
  2. Post your figures. A different approach you can take is to display the actual figures associated with your day’s work. You can track your reimbursement on a dry-erase board in the business office area so each day you see how many cases you’ve performed, how much in collections was received and how many days out you are, which is recalculated every day.
  3. Conduct a “core audit.” If a high percentage of your A/R is falling in the 90-day and over range, consider performing a comprehensive review of what your revenue cycle, starting from beginning of the billing and collections process (scheduling) to the end (completing the medical record).
  4. Instruct coders to code everything. To help ensure reimbursement isn’t left on the table, consider instructing your coders to code out everything in the operative note and there are no bundling issues. Billers need to go through what is and is not billable. This way they cannot miss any codes that may have been added to the approved list.
  5. Pay close attention to secondary payors. For those cases which you are filing claims with secondary payors, it is important that your business office staff pays close attention to secondary payors’ rules and understands what they will pay you for or you could miss out on reimbursement opportunities. Encourage your biller to take a little more time to work with the secondary payor even before sending out the claim for the primary payor. This will help ensure your biller understands what it is your organization needs to do to receive complete payment from the secondary payor. You may need to attach the primary payor’s explanation of benefits to the claim you file with the secondary payor to prove what procedures the primary payor covered and what it did not.  While such caution may mean that claims take a little longer to go out the door, if the benefits mean that you capture a few thousand more dollars, the delay will justify itself.
  6. Identify barriers preventing efficient physician dictation. A common issue that can hold up the billing process is slow physician dictation. If this is the case, you should work to identify the cause and see what you can do to assist the physician in completing dictation in a more timely manner.
  7. Be careful not to blindly rely on the clearinghouse’s messages. The relationship between your software (and its vendor), your clearinghouse and the payors is a constant challenge with frequent finger-pointing and passing blame. Your software vendor and clearinghouse should have a good working relationship. The billing software should have batch reports that easily match uploaded batches in the clearinghouse reporting system.  There are numerous reasons given for claims going into the black hole and you have to stay on top of the process. Don’t assume that just because it is billed and shows ‘accepted’ by the payor with your clearinghouse that this means it is processing. Payors do not have standardized acceptance reports; every report looks different and often times doesn’t explain rejections. If one small thing changes in the way the practice submits the claim or the way the payor receives it, the claim seems to fall through the cracks during claim submission.  Make sure that any change is communicated to the clearinghouse so they can properly set up and process the claims. Dedicate a full-time staff member who does nothing but works as the liaison between the practice software, clearinghouse, and payors.
  8. Hold collectors accountable. With your collectors juggling many accounts, it can be easy for mistakes to occur. While the occasional error may not significantly harm your practice, if it happens repeatedly and is not detected for a significant amount of time, the impact could be tremendous. Besides some of the methods intended to catch problems already described, consider ways to hold your staff members accountable and carefully monitor their work.  The collections process should be very structured and you have to assign accountability to the individual that’s doing it. You need to do checks and balances and make sure that person is actually doing what they’re supposed to be doing. Monitor your billers on a daily basis.  At the end of each day review what was collected during the day. Through this process, any mistakes are caught and fixed sooner and are less likely to be repeated the following day.
  9. Cut down time spent on appeals by documenting payor rules.  Payors may not be willing to share their rules or your questions about policies go unanswered or are answered incompletely. If you do not have a clear understanding of a payor’s rules, this can lead to significant — and potentially fruitless — time spent appealing rejected claims. Since the payors won’t always help you out, you need to help yourself.
  10. The sooner patients receive the bill, the better your chances of getting paid. When a procedure is complete, the first thing an office normally does is submit its claim to the insurance company as quickly as possible. Once the insurance company processes the claim, the EOB is sent to the medical practice and a copy goes to the patient. The patient likely opens the EOB, looks over it briefly, files it away, and doesn’t think about it again.  Why is this a problem? Let’s say your office sends patient statements on the 15th of each month and patients received their EOBs from their insurance companies on the 20th of the previous month. This means nearly 25 days passed between patients seeing the initial EOB from the insurance company and the day they received your statement. They are not likely to remember the EOB they looked at almost a month ago that showed the insurance company paid less than the original estimate.  Since patients will not associate your statement bill with their procedure or exam performed months ago, they will be less inclined to pay the bill for something that has become a distant memory. If you want to increase the likelihood of patients paying their bills, you must send the request for payment as soon as possible, preferably right after the procedure is complete and the EOB has been received. People are more likely to pay their bills when they can remember what they received in exchange for their money.

CPA Solutions focuses on these critical steps to ensure your practice is maximizing profits and efficiencies.  If you would like for us to give your practice a complimentary analysis on what we can do for you, please give us a call at 407.650.9088 or e-mail Info@ClientAccoutningService.com.

 

STARTING A BUSINESS AS A NON-RESIDENT

STARTING A BUSINESS AS A NON-RESIDENT

Starting a business in the United States to use to purchase investment rental properties require certain forms to be filed in order to start your business. As a Non-Resident, your typical business entity type will be a Limited Liability Company or LLC. This allows you to have one owner (which will default to a single member LLC) or multiple owners. Once you have figured out your ownership structure, the next step is to get your Employer Identification Number or EIN.

As a Non-US Citizens, you have two ways of applying for the EIN. Option one is if you have had your ITIN (Individual Taxpayer Identification Number) for more than a year, you can go to IRS.gov and apply directly through their internet application. If you do not have your ITIN or just recently applied for it, you have to use Form SS4 and either mail in the application to the IRS or fax it directly to them. This process can take about two to four weeks to complete. The IRS will mail you the EIN number within two weeks. With this number you then will want to register your business with your State you will be operating in.

TAX RETURN FILINGS

Getting your business started is just the first step in complying with US Tax Laws. The next filing will be your annual Tax Returns. If you are the only owner of your business, and you formed as an LLC, then you will only need to file Form 1040NR personal tax return. The rental income and expenses will be reported on Schedule E of the return. Any income after expenses will result in potential taxes due.

If you have multiple owners (Partners), then the LLC will file Form 1065 Partnership Return. Any income that is reported on Form 1065 will be passed through to the personal tax return or Form 1040NR. You will then pay any tax as stated in the above paragraph.

Things do get complicated with foreign-owned LLC’s that file Form 1065 however. The IRS wants the partnership to prepay tax for the Non-Resident Partners when the tax return is filed. Those Non-Resident Partners would then claim that money as a refund or go towards the taxes due on their personal return Form 1040NR.

Filing a Partnership Return with Foreign Owners can be complex, but CPA Solutions here to assist you in those filing requirements.

SELLING YOUR INVESTMENT PROPERTY

Selling your investment property as a US Non-Resident requires certain forms to be filed with the IRS at closing. This is called FIRPTA or Foreign Investment in Real Property Tax Act. At closing, the title company that is handling the closing is required to withhold 15% of the Gross Sales price. At this point, you have two options.

Option One is to have the Title Company forward the funds directly to the IRS using Forms 8288 and 8288A. You would then use the Returned Stamped (IRS will certify with a stamp) Form 8288A to claim the money as a refund on your Form 1040NR.

Option Two is usually the more desired option, but not all title companies allow this option. At the day of closing on the property, the Title Company will put that 15% into a separate bank account while Form 8288B FIRPTA Application is sent to the IRS. This Form 8288B requests that the IRS either remove the withholding requirement or reduce the required withholding. This option takes about two to four months and may allow you to get most if not all of the 15% withholding back more quickly.

There is one exemption to FIRPTA. If the property selling price is under $300,000 and the buyers will occupy the property as their permanent residence, then the sale can be exempt from FIRPTA. The Title Company should be able the waiver for you.

CPA Solutions is here to help. We are experts in filing these forms and helping to navigate you through the complicated process of selling your investment property.  For more information, please call or email:  407.650.9088 or info@MyCPASolutions.com