IR-2024-253: IRS provides relief for Helene; various deadlines postponed to May 1, 2025; part or all of 7 states qualify

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Issue Number:    IR-2024-253

Inside This Issue


IRS provides relief for Helene; various deadlines postponed to May 1, 2025; part or all of 7 states qualify 

WASHINGTON — The Internal Revenue Service today announced disaster tax relief for all individuals and businesses affected by Hurricane Helene, including the entire states of Alabama, Georgia, North Carolina and South Carolina and parts of Florida, Tennessee and Virginia. 

Taxpayers in these areas now have until May 1, 2025, to file various federal individual and business tax returns and make tax payments. Among other things, this includes 2024 individual and business returns normally due during March and April 2025, 2023 individual and corporate returns with valid extensions and quarterly estimated tax payments.    

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Besides all of Alabama, Georgia, North Carolina and South Carolina, this currently includes 41 counties in Florida, eight counties in Tennessee and six counties and one city in Virginia.

Individuals and households that reside or have a business in any one of these localities qualify for tax relief. The same relief will be available to other states and localities that receive FEMA disaster declarations related to Hurricane Helene. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov. 

Filing and payment relief 

The tax relief postpones various tax filing and payment deadlines that occurred beginning on Sept. 22, 2024, in Alabama; Sept. 23 in Florida; Sept. 24 in Georgia; Sept. 25 in North Carolina, South Carolina and Virginia; and Sept. 26 in Tennessee. In all of these states, the relief period ends on May 1, 2025 (postponement period). As a result, affected individuals and businesses will have until May 1, 2025, to file returns and pay any taxes that were originally due during this period. 

This means, for example, that the May 1, 2025, deadline will now apply to: 

  • Any individual or business that has a 2024 return normally due during March or April 2025.
  • Any individual, business or tax-exempt organization that has a valid extension to file their 2023 federal return. The IRS noted, however, that payments on these returns are not eligible for the extra time because they were due last spring before the hurricane occurred. 
  • 2024 quarterly estimated income tax payments normally due on Jan. 15, 2025, and 2025 estimated tax payments normally due on April 15, 2025.
  • Quarterly payroll and excise tax returns normally due on Oct. 31, 2024, and Jan. 31 and April 30, 2025. 

In addition, the IRS is also providing penalty relief to businesses that make payroll and excise tax deposits. Relief periods vary by state. Visit the Around the Nation page for details. 

The Disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period. Among other things, this means that any of these areas that previously received relief following Tropical Storm Debby will now have those deadlines further postponed to May 1, 2025. 

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief. 

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer should call the number on the notice to have the penalty abated. 

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization. Disaster area tax preparers with clients located outside the disaster area can choose to use the Bulk Requests from Practitioners for Disaster Relief option, described on IRS.gov. 

Additional tax relief 

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2024 return normally filed next year), or the return for the prior year (the 2023 return filed this year). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means Oct. 15, 2025. Be sure to write the FEMA declaration number on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details. 

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525, Taxable and Nontaxable Income, for details. 

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow. 

The IRS may provide additional disaster relief in the future. 

The tax relief is part of a coordinated federal response to the damage caused by this storm and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov. 

Reminder about tax return preparation options 

  • MilTax, a Department of Defense program, offers free return preparation software and electronic filing for federal tax returns and up to three state income tax returns. It’s available for all military members and some veterans, with no income limit.

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IR-2024-254: IRS granting dyed diesel penalty relief as a result of Hurricane Helene

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Issue Number:    IR-2024-254

Inside This Issue


IRS granting dyed diesel penalty relief as a result of Hurricane Helene

WASHINGTON — In response to disruptions resulting from Hurricane Helene, the Internal Revenue Service will not impose a penalty when dyed diesel fuel with a sulfur content that does not exceed 15 parts-per-million is sold for use or used on the highway throughout Alabama, Georgia, North Carolina, and South Carolina and in the following counties in Florida, Tennessee and Virginia: 

Florida: Alachua, Bay, Bradford, Calhoun, Charlotte, Citrus, Collier, Columbia, Dixie, Escambia, Franklin, Gadsden, Gilchrist, Gulf, Hamilton, Hernando, Hillsborough, Holmes, Jackson, Jefferson, Lafayette, Lee, Leon, Levy, Liberty, Madison, Manatee, Marion, Monroe, Okaloosa, Pasco, Pinellas, Santa Rosa, Sarasota, Sumter, Suwannee, Taylor, Union, Wakulla, Walton and Washington counties. 

Tennessee: Carter, Cocke, Greene, Hamblen, Hawkins, Johnson, Unicoi and Washington counties. 

Virginia: City of Galax, Grayson, Smyth, Tazewell, Washington, Wise and Wythe counties. 

This relief is retroactive to Sept. 26, 2024, and will remain in effect through Oct. 15, 2024. 

This penalty relief is available to any person that sells or uses dyed diesel fuel for highway use. In the case of the operator of the vehicle in which the dyed diesel fuel is used, the relief is available only if the operator or the person selling such fuel pays the tax of 24.4 cents per gallon that is normally applied to diesel fuel for highway use. 

The IRS will not impose penalties for failure to make semimonthly deposits of tax for dyed diesel fuel sold for use or used in diesel powered vehicles on the highway in these areas during the relief period. IRS Publication 510, Excise Taxes, has information on the proper method for reporting and paying the tax. 

Ordinarily, dyed diesel fuel is not taxed, because it is sold for uses exempt from excise tax, such as to farmers for farming purposes, for home heating use and to local governments. 

The IRS is closely monitoring the situation and will provide additional relief as needed.

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IR-2024-252: IRS announces new relief for taxpayers affected by terrorist attacks in Israel: 2023 and 2024 returns and payments are now due Sept. 30, 2025; other relief available

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Issue Number:    IR-2024-252

Inside This Issue


IRS announces new relief for taxpayers affected by terrorist attacks in Israel: 2023 and 2024 returns and payments are now due Sept. 30, 2025; other relief available

WASHINGTON — The Internal Revenue Service announced today that due to recent terrorist attacks in Israel, the agency is providing additional tax relief to affected individuals and businesses, postponing until Sept. 30, 2025, a wide range of deadlines for filing federal returns, making tax payments and performing other time-sensitive tax-related actions. 

Notice 2024-72, posted today on IRS.gov, covers similar groups but is separate from Notice 2023-71, which originally provided relief to taxpayers affected by the Oct. 7, 2023 attacks in Israel. 

In both Notice 2023-71 and Notice 2024-72, the IRS is providing relief to taxpayers who, due to the terrorist attacks, may be unable to meet a tax-filing or tax-payment obligation, or may be unable to perform other time-sensitive tax-related actions. 

Today’s notice (along with Notice 2023-71) postpones various tax filing and payment deadlines that occurred or will occur during the period from Oct. 7, 2023, through Sept. 30, 2025, for taxpayers eligible for relief under both notices. As a result, affected individuals and businesses have until Sept. 30, 2025, to file returns and pay any taxes that are due during this period. See Notice 2024-72 for additional relief provided and who qualifies for the relief. 

The IRS automatically identifies taxpayers whose principal residence or principal place of business is located in the covered area based on previously filed returns and applies relief. Other eligible taxpayers, or their representatives, whose filing address is outside the covered area can obtain relief by calling the IRS disaster hotline at 866-562-5227. Alternatively, international callers may call 267-941-1000. 

Reminder about tax-preparation assistance 

Any individual or family whose adjusted gross income (AGI) was $79,000 or less in 2023 can use IRS Free File’s Guided Tax Software at no cost. There are products available in English and Spanish. 

Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper Form 1040, and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.

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IR-2024-251: Volunteers needed across the country to provide free tax services; sign up from Oct. to Jan. for the upcoming filing season

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Issue Number:    IR-2024-251

Inside This Issue


Volunteers needed across the country to provide free tax services; sign up from Oct. to Jan. for the upcoming filing season

WASHINGTON — The Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs are currently recruiting volunteers for the upcoming filing season. 

Each year, thousands of volunteers help their community and gain invaluable professional experience. Volunteers often include students, tax professionals, retirees and those looking to help their community. 

VITA/TCE sites can be found nationwide and prepare millions of tax returns each year for low-to moderate-income taxpayers at no cost. The free tax program is generally available for individuals and families with low to moderate incomes and help underserved populations such as persons with disabilities, limited English speakers, senior citizens and more. 

No experience is necessary to become a VITA or TCE volunteer. Free specialized training is provided by the IRS. Available positions are not limited to tax preparation and can include interpreters, greeters and computer specialists. 

Volunteers have the option to participant at both in-person and virtual sites. Hours are often flexible with many sites operating at night and on weekends. Finding a nearby free tax help location is easy. They can often be found in local libraries, community centers, schools and churches. Locate the VITA/TCE site closest to you by using the VITA Locator Tool. 

The IRS’ peak period for recruiting volunteers is October through January. Individuals can sign up during other months, but their information will be held until IRS partners are accepting volunteers for the next filing season. Those who signed up within the last two months do not need to sign up again unless their contact information has changed.  

To learn more about becoming a VITA/TCE volunteer, visit IRS Tax Volunteers. Those interested can sign up using the VITA/TCE Volunteer and Partner Sign Up. Approximately 14 days after signing up, the IRS will provide a list of available local VITA/TCE sites and an invite to a virtual orientation.

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Tax Tip 2024-79: Extension filers: Gather all tax info before filing

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Issue Number: Tax Tip 2024-79


Extension filers: Gather all tax info before filing

The deadline for taxpayers with an extension to file is around the corner – on Tuesday, Oct. 15. It’s important for taxpayers to gather all their records and get copies of any missing documents before they sit down to prepare their return, whether they are filing on their own or working with a professional tax preparer. This helps them file a complete and accurate tax return.

What documents to gather
Here’s the information taxpayers may need. Not all information applies to all taxpayers.

  • Social Security numbers of everyone listed on the tax return. 
  • Bank account and routing numbers for direct deposit or information to make a tax payment.
  • Forms W-2 from employer(s).
  • Forms 1099 from banks, issuing agencies and other payers covering such payments as unemployment compensation, dividends and distributions from a pension, annuity or retirement plan.
  • Form 1099-K or 1099-MISC or other income statement for workers in the gig economy.
  • Form 1099-INT for interest received.
  • Other income documents and records of virtual currency transactions.
  • Form 1095-A, Health Insurance Marketplace Statement.
  • Information to support claiming other credits or deductions such as receipts for child or dependent care, college expenses or donations.

Missing documents: What taxpayers should do
To request a missing W-2 or Form 1099, taxpayers should contact the employer, payer or issuing agency. This also applies for taxpayers who received an incorrect W-2 or Form 1099.

If they still can’t get the forms, taxpayers can complete Form 4852, Substitute for Form W-2, Wage and Tax Statement or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, Etc. If a taxpayer doesn’t receive the missing or correct form in time to file their tax return, they can estimate the wages or payments made to them and any taxes withheld. They can use Form 4852 to report this information on their federal tax return.

Find an authorized e-file provider
For help finding a tax professional who e-files, taxpayers can use the Authorized IRS e-File Provider Locator Service. This is a nationwide listing of all businesses that the IRS has authorized as an IRS e-file provider. They’re qualified to prepare, transmit and process e-filed returns.

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IR-2024-250: IRS relief now available to storm victims in parts of Illinois; multiple deadlines postponed to Feb. 3, 2025

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Issue Number:    IR-2024-250

Inside This Issue


IRS relief now available to storm victims in parts of Illinois; multiple deadlines postponed to Feb. 3, 2025 

WASHINGTON — The Internal Revenue Service today announced disaster tax relief for individuals and businesses in parts of Illinois affected by severe storms, tornadoes, straight-line winds and flooding that began on July 13, 2024. 

Affected taxpayers now have until Feb. 3, 2025, to file various federal individual and business tax returns and make tax payments.   

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, this includes Cook, Fulton, Henry, St. Clair, Washington, Will and Winnebago counties in Illinois. 

Individuals and households that reside or have a business in any one of these localities qualify for tax relief. The same relief will be available to any other counties added later to the disaster area. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov. 

Filing and payment relief 

The tax relief postpones various tax filing and payment deadlines that occurred beginning on July 13, 2024, and ending on Feb. 3, 2025 (postponement period). As a result, affected individuals and businesses will have until Feb. 3, 2025, to file returns and pay any taxes that were originally due during this period. 

This means, for example, that the Feb. 3, 2025, deadline will now apply to: 

  • Any individual, business or tax-exempt organization that has a valid extension to file their 2023 federal return. The IRS noted, however, that payments on these returns are not eligible for the extra time because they were due last spring before the storms occurred. 
  • Quarterly estimated income tax payments normally due on Sept. 16, 2024, and Jan. 15, 2025.
  • Quarterly payroll and excise tax returns normally due on July 31, Oct. 31, 2024, and Jan. 31, 2025. 

In addition, penalties for failing to make payroll and excise tax deposits due on or after July 13, 2024, and before July 29, 2024, will be abated, as long as the deposits were made by July 29, 2024. 

The Disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.  

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief. 

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer should call the number on the notice to have the penalty abated. 

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization. Disaster area tax preparers with clients located outside the disaster area can choose to use the Bulk Requests from Practitioners for Disaster Relief option, described on IRS.gov. 

Additional tax relief 

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2024 return normally filed next year), or the return for the prior year (the 2023 return filed this year). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means Oct. 15, 2025. Be sure to write the FEMA declaration number – 4819-DR on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details. 

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525, Taxable and Nontaxable Income, for details. 

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow. 

The IRS may provide additional disaster relief in the future. 

The tax relief is part of a coordinated federal response to the damage caused by these storms and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov. 

Reminder about tax return preparation options 

  • MilTax, a Department of Defense program, offers free return preparation software and electronic filing for federal tax returns and up to three state income tax returns. It’s available for all military members and some veterans, with no income limit.

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IRS video tax tip: Here’s How to use the Find Your Trusted Partner Tool

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IRS Tax Tips September 27, 2024

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Issue Number:  Here’s How to use the Find Your Trusted Partner Tool


Here is a video tax tip from the IRS:

Here’s How to use the Find Your Trusted Partner Tool English | Spanish

Subscribe today: The IRS YouTube channels provide short, informative videos on various tax related topics.

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The New Era of “No Tax” Policies: Selective Tax Exemptions and Their Side Effects

No Tax on Tips, No Tax on Over TimeFormer President and current candidate Donald Trump introduced a new policy of his in a recent Arizona rally: No more income tax on overtime pay. This follows both Trump and Vice President Harris’ proposal for a no income tax on tips policy, as well.

Below we will look at the two recent proposals and what they could mean for both taxpayers and businesses.

No Tax on Tips

The no tax on tips policy looks to lighten the tax burden on service industry workers. According to the Fair Labor and Standards Act, anyone who “customarily and regularly” receives $30 or more in tips per month is considered a tipped worker. The mechanism to exempt tip income could possibly come through three different mechanisms.

One option would be to categorize tips as gifts. Service employees are often paid wages lower than the minimum wage (as low as $2.31 per hour), with employers required to “top-up” an employee to the federal minimum wage of $7.25 if tips don’t at least make up the difference themselves. As a result, considering tips as gifts may not legally work.

A second option is to treat a specified amount of tips as non-taxable income. Consider a policy, for example, in which up to $25,000 in tips is treated as non-taxable income. Legally, this is straightforward, but it could have various knock-off effects on those it is intended to help. For example, a taxpayer’s gross income could fall so low they no longer qualify for the earned income tax credit and end up being a net negative.

Finally, there is a third option of creating a new deduction; allowing taxpayers to first claim the income and then take a deduction to offset it. The issue here is that given the claimed income level of most tipped workers, an additional deduction may not be one-for-one incrementally beneficial to the standard deduction. In other words, so much of their income is already non-taxable, this wouldn’t make much of a difference.

Side-Effects

Depending on how the policy is structured, there are negative side effects that could accompany the policy change. Compliance with reporting tip income is already spotty at best. It’s not uncommon for tipped workers to underreport their tip income, especially for cash tips. The main concern is that employers and employees may try to game the system. There is a real chance that who is tipped changes and people may try to change compensation schemes so that other types of income are then changed to tip income to take advantage of the changes; especially for taxpayers for whom the law was never intended to help.

Non-Taxable Overtime

The second proposal is to exempt overtime wages from income taxation. The idea is that it would help workers who get to keep more of their money; and at the same time helping businesses, since employees would be incentivized to work more hours, thereby negating the need to hire more employees. While on the surface it seems like a policy to help the hardest working, there are potential problems.

Unfair to Regular Wage Earners

There are two possible issues. First, it leaves behind hourly workers who cannot work overtime due to other responsibilities, health or their job’s duties. It also disadvantages those who have to work multiple jobs (because their job doesn’t offer overtime, but they need the money).

Second, it doesn’t consider salaried positions. There are many salaried positions, where workers are exempt from overtime laws – and a large swath of these are not highly paid positions.

Administrative Complications

Employers and the IRS would need to deal with distinguishing between regular wages and overtime earnings. What is considered overtime is not always clear when there are pay concepts such as bonuses, shift differentials, commissions or other alternative payment arrangements. It would also add significant complexity to payroll systems.

Conclusion

While both policies are well intended, the devil is in the details. Implementation would need to be carefully considered; the intended taxpayers might not be the main beneficiaries; and there is room for fraud.

How to Measure the Quality of Accounts Receivable

How to Measure the Quality of Accounts ReceivableAnalyzing a company’s Accounts Receivables is an effective way to measure its current cash flows and the likelihood of maintaining healthy cash flows. According to the U.S. Chamber of Commerce’s Small Business Index (Third Quarter 2024), 68 percent of small business owners reported being content with their third quarter cash flow performance. This illustrates the importance for small business owners to do everything possible to maintain healthy cash flows, including evaluating the quality of accounts receivables (A/R).

Defining Accounts Receivables

This account or line item on the balance sheet gives the business’ managers/owners and investors a measure on how much money a business expects to receive from selling goods or services. It’s an important metric because it’s a measure of what’s owed, but not yet collected from rendered services/goods.

Consideration for Uncollectable Accounts Receivables

While businesses hope to collect 100 percent of their A/Rs, businesses take a realistic view that not everyone will pay up. For whatever reason, A/Rs aren’t always collected and must be accounted for as uncollectable. Therefore, a contra account is setup to account for accounts receivables that turn into bad debt. This contra account is linked to the accounts receivable, an asset reported on the balance sheet, offsetting the accounts receivable balance. However, there are many metrics for companies to manage their health internally, and some of these metrics are discussed below.

Accounts Receivable-to-Sales Ratio

This is determined by taking a “snapshot” of the ratio or division of the accounts receivables divided by sales over a period of time. The resulting calculation is the percentage of a business’ unpaid sales. The higher the accounts receivable-to-sales ratio, the riskier the company’s financial health. It indicates a business has accounts receivables with a low likelihood of being collected. It’s calculated as follows:

AR to Sales = AR / Sales

Since it measures the mix of how much a business relies on cash versus credit, it can prompt an analyst to determine whether a company is able to operate on minimal cash with low fixed costs and limited outstanding debt. It can also prompt an analyst to determine if a company is subject to cyclical sales and is dependent on the business cycle and whether it’s the right time to invest in a company or hold off until a better entry point is established.

Accounts Receivable Turnover Ratio

This calculation determines how fast a business can convert its accounts receivables into cash. It calculates this over a discrete period, be it a month, quarter, year, etc. It’s calculated as the sales over a period divided by the average accounts receivables balance over the same period. It’s calculated as follows:

ARTR = Net Credit Sales / Average Accounts Receivable

Net Credit Sales = Sales on Credit – Sales Returns – Sales Allowances

Average Accounts Receivable = (Starting + Ending A/R Over a Fixed Time) / 2

The higher the ratio, the less friction businesses have in converting their accounts receivables into cash. One important consideration to keep in mind is that if total sales are used for this calculation, which some business do, the results don’t reflect the original formula because it doesn’t remove the sales on credit or sales allowances.

Days Sales Outstanding (DSO)

This metric reveals how fast (in average number of days) a company is able to turn its receivables into cash. It’s the average accounts receivables divided by net credit sales multiplied by 365. It’s calculated as follows:

DSO = (A/R / net credit sales) x 365 days

The lower the DSO, the better quality and the more efficient a company is in converting its accounts receivables into cash. The higher the DSO, and especially when it goes beyond 90 days, can represent two different financial measures. The first is that the business’ accounts receivables might not be collectable. The second is that the company might be able to make sales but with deteriorating earnings.

While there are many ways to analyze a company’s health, along with many ways to analyze the quality of existing and future accounts receivables, these are a few ways to evaluate a company’s present financial health and prospects for the future.

Sources

https://www.uschamber.com/sbindex/key-findings

Pre-Retirement Planning Guide Estate Plan

Pre-Retirement Planning Guide - Step 5: Estate PlanStep 5: Estate Plan

The value of an estate plan is twofold. Yes, you want to pass your assets on to heirs in a seamless and tax-efficient manner. But it is also a roadmap to help your heirs understand the full breadth of your assets, where they are located, and how they should be disseminated according to your wishes.

Two important components of your estate plan come into play before you pass away. The first is a Power of Attorney. This document appoints someone you trust – a relative, a friend or a custodial like a bank – to handle your finances on your behalf should you become incapacitated. The second is a Health Care Directive, in which you name someone to make medical decisions for you when you no longer can. To accompany this document, you also may want to complete a living will, generally a boilerplate form that lets medical providers know if you want to forgo life-saving procedures and treatments if you’re in a terminal condition, a coma or near the end of life. Also known as a DNR (do not resuscitate), this document dictates your wishes rather than placing the burden on someone else.

Write a Last Will and Testament

The more complex the estate, the more likely you will need an estate attorney to help you. However, in many cases, an individual can create a will on his own using state-provided forms. The most important thing to remember is that each state has its own requirements regarding wills, such as whether it can be handwritten or even digital and who and how it should be witnessed and possibly notarized. Every time you move to another state throughout your lifetime, you’ll need to update or replace your will to reflect your new home state’s rules.

Your will should name an executor or personal representative in charge of executing the will’s instructions. If you are not married and have minor children, you’ll need to name a guardian for them once you’re deceased. Note that while the age of majority is generally 18, this can vary by state or jurisdiction. Your will should instruct how your assets should be disseminated and to whom, including contingent beneficiaries (should your first choice die before you), and specifically name anyone whom you don’t want to receive proceeds. For example, without a will as a guide, a probate judge may decide that a step-brother should receive your assets instead of your best friend since he is technically a relative.

Be aware that the beneficiary designations on your accounts (e.g., bank, investment, insurance policies) supersede instructions in your will. For example, if you want your second wife to be the sole beneficiary of your assets but forget to change her as the beneficiary on your 401(k) account, your ex will get the payout. That’s the same for all of your accounts with a named beneficiary, so every time you remarry or experience other life-altering events, be sure to review your account beneficiaries and estate plan documents.

Also, make it easy for your executor to find the documents needed to liquidate and/or transfer assets. A simple way to do this is to keep a three-ring binder or file drawer that houses documents/statements for each of your assets, including banking and investment accounts, former and current employer retirement plans, life insurance policies, annuities, real estate property records, etc. If you have a home or property that needs to be sold with proceeds split among your heirs, you should keep records to help establish the property’s cost basis. This includes the sale price and closing expenses from when you purchased the home, as well as the cost of any major repairs or renovations (e.g., new roof, HVAC, additional rooms). When the house is sold, the amount of the sale price minus the cost basis will determine whether or not capital gains need to be paid. Note that taxes on property and investments will need to be paid before assets can be disseminated to your heirs.

Your will is designed to guide a probate judge so that your estate can be settled quickly. However, if you want your heirs to have access to your assets without being subject to probate, consider naming them as joint account owners on your bank and investment accounts as well as the deeds to your properties.

With larger or more complex estates, you might want to consider a trust. Estate planning trusts vary by the type of beneficiary, payout structure, and tax benefit. A trust avoids probate and can help minimize the tax burden on your accumulated assets. Bear in mind that there are dozens of different types of trusts for different circumstances, so it’s important to work with an experienced estate attorney to determine what works best for your situation.

Remember, your estate plan should be a living document that is reviewed and updated every few years to incorporate any new changes in your life, including marriage, children, divorce, and death.