Friday, October 21st, 2016
Bill Curtis (Partner) and Joseph Martin (Director) of the Birmingham office spoke to Auburn University’s Beta Alpha Psi on Tuesday, October 18th on the topic of “Business Development: Getting Engaged Early in Your Career.”
Thank you for extending your knowledge of a promising career in accounting to these students.
Great job guys!
Thursday, October 20th, 2016
M&J and Butler Snow law firm are partnering up to offer a one day CPE on November 2, 2016. This will be held in their Nashville Office location.
10 am – Welcome and Introductions – Jim Vaughn, Mauldin & Jenkins, LLC
10:10 am – 11 am – Accounting and Tax Update – Jim Vaughn and Christian Bennett, Mauldin & Jenkins, LLC
11 am – 11:15 am – Break
11:15 am – 12:15 pm – Current Trends in Executive Compensation – Beth Sims, Butler Snow
12:15 pm – 1:15 pm – Lunch Provided – Topic: Strategic Options – Lee Burrows and Will Brackett, Banks Street Partners
1:15 pm – 1:30 pm – Break
1:30 pm – 3 pm – Roundtable Discussion of Hot Topics – Jim Vaughn, Mauldin & Jenkins, LLC and Adam Smith, Butler Snow
Wednesday, October 19th, 2016
In addition to income tax, you must pay Social Security and Medicare taxes on earned income, such as salary and self-employment income. The 12.4% Social Security tax applies only up to the Social Security wage base of $118,500 for 2016. All earned income is subject to the 2.9% Medicare tax.
The taxes are split equally between the employee and the employer. But if you’re self-employed, you pay both the employee and employer portions of these taxes on your self-employment income.
Additional 0.9% Medicare tax
Another employment tax that higher-income taxpayers must be aware of is the additional 0.9% Medicare tax. It applies to FICA wages and net self-employment income exceeding $200,000 per year ($250,000 for married filing jointly and $125,000 for married filing separately).
If your wages or self-employment income varies significantly from year to year or you’re close to the threshold for triggering the additional Medicare tax, income timing strategies may help you avoid or minimize it. For example, as a self-employed taxpayer, you may have flexibility on when you purchase new equipment or invoice customers. If your self-employment income is from a part-time activity and you’re also an employee elsewhere, perhaps you can time with your employer when you receive a bonus.
Something else to consider in this situation is the withholding rules. Employers must withhold the additional Medicare tax beginning in the pay period when wages exceed $200,000 for the calendar year — without regard to an employee’s filing status or income from other sources. So your employer might not withhold the tax even though you are liable for it due to your self-employment income.
If you do owe the tax but your employer isn’t withholding it, consider filing a W-4 form to request additional income tax withholding, which can be used to cover the shortfall and avoid interest and penalties. Or you can make estimated tax payments.
Deductions for the self-employed
For the self-employed, the employer portion of employment taxes (6.2% for Social Security tax and 1.45% for Medicare tax) is deductible above the line. (No portion of the additional Medicare tax is deductible, because there’s no employer portion of that tax.)
As a self-employed taxpayer, you may benefit from other above-the-line deductions as well. You can deduct 100% of health insurance costs for yourself, your spouse and your dependents, up to your net self-employment income. You also can deduct contributions to a retirement plan and, if you’re eligible, an HSA for yourself. Above-the-line deductions are particularly valuable because they reduce your adjusted gross income (AGI) and modified AGI (MAGI), which are the triggers for certain additional taxes and the phaseouts of many tax breaks.
For more information on the ins and outs of employment taxes and tax breaks for the self-employed, please contact us.
Friday, October 14th, 2016
Until recently, estate planning strategies typically focused on minimizing federal gift and estate taxes, such as by giving away assets during life to reduce the taxable estate. Today, however, the focus has moved toward income taxes, making the coordination of income tax planning and estate planning more important.
Why the change?
Since 2001, the federal exemption has grown from $675,000 to $5.45 million, meaning that fewer people have to worry about gift and estate tax liability. In addition, the top gift and estate tax rate has decreased from 55% to 40%, while the top individual income tax rate has increased to 39.6% — nearly as high as the top gift and estate tax rate.
The heightened importance of income taxes means that holding assets until death may be advantageous. If you give away an appreciated asset, the recipient takes over your tax basis in the asset, triggering capital gains tax should he or she turn around and sell it.
When an appreciated asset is inherited, on the other hand, the recipient’s basis is “stepped up” to the asset’s fair market value on the date of death, erasing the built-in capital gain. So retaining appreciating assets until death can save significant income tax.
Year end strategy
It is, however, possible to transfer appreciated assets now without your family taking a capital gains tax hit. Such a strategy can be beneficial if you have appreciated assets you’ve held more than one year that you’d like to sell, but you’re concerned about the impact on your 2016 tax bill.
You just need to have family members who are in the 10% or 15% regular income tax bracket and thus eligible for the 0% long-term capital gains rate. Then you can transfer the appreciated assets to them and they can sell the assets tax-free (to the extent the gains don’t push them into a higher bracket).
The transfer won’t create gift tax liability, either, as long as you can apply your $14,000 per year per recipient gift tax annual exclusion or a portion of your lifetime exemption. But before transferring the assets, make sure the recipient won’t be subject to the “kiddie” tax.
Of course, depending on the outcome of the November elections, gift and estate taxes could again surpass income taxes in estate planning importance for some families. If you have questions about coordinating your income tax planning with your estate plan, please contact us.
Thursday, October 13th, 2016
Friday, October 7th, 2016
M&J was proud to sponsor and attend the GA Campaign For Adolescent Power & Potential’s Annual Empower party last night. Jane Fonda and Lily Tomlin were in attendance as special hostesses. Pictured below is our very own Kimberly Haynes, Manager and Aleisa Howell, Partner.
Wednesday, October 5th, 2016
There’s a lot to think about when you change jobs, and it’s easy for a 401(k) or other employer-sponsored retirement plan to get lost in the shuffle. But to keep building tax-deferred savings, it’s important to make an informed decision about your old plan. First and foremost, don’t take a lump-sum distribution from your old employer’s retirement plan. It generally will be taxable and, if you’re under age 59½, subject to a 10% early-withdrawal penalty. Here are three tax-smart alternatives:
1. Stay put. You may be able to leave your money in your old plan. But if you’ll be participating in your new employer’s plan or you already have an IRA, keeping track of multiple plans can make managing your retirement assets more difficult. Also consider how well the old plan’s investment options meet your needs.
2. Roll over to your new employer’s plan. This may be beneficial if it leaves you with only one retirement plan to keep track of. But evaluate the new plan’s investment options.
3. Roll over to an IRA. If you participate in your new employer’s plan, this will require keeping track of two plans. But it may be the best alternative because IRAs offer nearly unlimited investment choices.
If you choose a rollover, request a direct rollover from your old plan to your new plan or IRA. If instead the funds are sent to you by check, you’ll need to make an indirect rollover (that is, deposit the funds into an IRA) within 60 days to avoid tax and potential penalties.
Also, be aware that the check you receive from your old plan will, unless an exception applies, be net of 20% federal income tax withholding. If you don’t roll over the gross amount (making up for the withheld amount with other funds), you’ll be subject to income tax — and potentially the 10% penalty — on the difference.
There are additional issues to consider when deciding what to do with your old retirement plan. We can help you make an informed decision — and avoid potential tax traps.
Monday, October 3rd, 2016
Congratulations to M&J’s newly promoted employees!!
Rob Douglas to Manager
Kyle Nichols to Manager
Blair Blackburn to Staff II
Jarrett Clubb to Manager
Ben Peterson to Staff II
Mimi Morton to Staff II
Cam Tompkins to Staff II
Will Derzis to Staff II
Derek Foster to Staff II
Kimberly Haynes to Manager
Ali Geiger to Staff II
Chad Hopkins to Staff II
Nick Jarrett to Staff II
Chris Policastro to Staff II
Thursday, September 29th, 2016
We are incredibly proud of our CFO, Kristen Lord, for being named one of Georgia Southern University’s 40 Under 40 Class of 2016!
Out of over 83,000 living alumni, more than 33,000 are under 40 years old. 40 Under 40 honorees not only represent the excellence of the University’s young alumni, but also demonstrate the positive contributions and remarkable achievements for which Georgia Southern graduates are known
This honor, given out by the Georgia Southern University Alumni Association, recognizes young alumni that are leading the way in business, leadership, community, educational and/or philanthropic endeavors. The forty will be chosen by a selection committee based on their professional expertise and achievements, as well as dedication to charitable and community initiatives.
“I am honored to have been selected. Thank you to those that nominated me and support all my GSU-loving endeavors. I am so proud to represent Mauldin & Jenkins in the 2016 40 Under 40 Class” – Kristen Lord, CFO Mauldin & Jenkins
Sunday, September 25th, 2016
Who doesn’t love a trip to Nashville? Thanks for having us at the Tennessee Society of CPAs Financial Institutions Conference. We always enjoy showing our support for TSCPA and handing out M&J goodies!