Archive for the ‘Uncategorized’ Category

Tuesday, July 25th, 2017

M&J Supports LeadingAge Georgia

It is always such a pleasure supporting LeadingAge GA! As a presenting sponsor, Shannon MacArthur and Sydney Barre had the opportunity to exhibit at the Fair Housing Symposia today. For more information about LeadingAge GA visit: http://institute.leadingagega.org

Jacque Thornton, Sr. Vice President of LeadingAge Georgia and Shannon MacArthur, Partner in Atlanta office

Tuesday, July 25th, 2017

3 midyear tax planning strategies for individuals

In the quest to reduce your tax bill, year end planning can only go so far. Tax-saving strategies take time to implement, so review your options now. Here are three strategies that can be more effective if you begin executing them midyear:

1. Consider your bracket

The top income tax rate is 39.6% for taxpayers with taxable income over $418,400 (singles), $444,550 (heads of households) and $470,700 (married filing jointly; half that amount for married filing separately). If you expect this year’s income to be near the threshold, consider strategies for reducing your taxable income and staying out of the top bracket. For example, you could take steps to defer income and accelerate deductible expenses. (This strategy can save tax even if you’re not at risk for the 39.6% bracket or you can’t avoid the bracket.)

You could also shift income to family members in lower tax brackets by giving them income-producing assets. This strategy won’t work, however, if the recipient is subject to the “kiddie tax.” Generally, this tax applies the parents’ marginal rate to unearned income (including investment income) received by a dependent child under the age of 19 (24 for full-time students) in excess of a specified threshold ($2,100 for 2017).

2. Look at investment income

This year, the capital gains rate for taxpayers in the top bracket is 20%. If you’ve realized, or expect to realize, significant capital gains, consider selling some depreciated investments to generate losses you can use to offset those gains. It may be possible to repurchase those investments, so long as you wait at least 31 days to avoid the “wash sale” rule.

Depending on what happens with health care and tax reform legislation, you also may need to plan for the 3.8% net investment income tax (NIIT). Under the Affordable Care Act, this tax can affect taxpayers with modified adjusted gross income (MAGI) over $200,000 ($250,000 for joint filers). The NIIT applies to net investment income for the year or the excess of MAGI over the threshold, whichever is less. So, if the NIIT remains in effect (check back with us for the latest information), you may be able to lower your tax liability by reducing your MAGI, reducing net investment income or both.

3. Plan for medical expenses

The threshold for deducting medica

l expenses is 10% of AGI. You can deduct only expenses that exceed that floor. (The threshold could be affected by health care legislation. Again, check back with us for the latest information.)

Deductible expenses may include health insurance premiums (if not deducted from your wages pretax); long-term care insurance

premiums (age-based limits apply); medical and dental services and prescription drugs (if not reimbursable by insurance or paid through a tax-advantaged account); and mileage

driven for health care purposes (17 cents per mile driven in 2017). You may be able to control the timing of some of these expenses so you can bunch them into every other year and exceed the applicable floor.

These are just a few ideas for slashing

your 2017 tax bill. To benefit from midyear tax planning, consult us now. If you wait until the end of the year, it may be too late to execute the strategies that would save you the most tax.

© 2017

 

Monday, July 24th, 2017

M&J Makes PB&J’s for MUST Ministries

Today the Atlanta office packed over 750 lunches in under one hour- almost 200 more lunches than last year! Atlanta’s community service chair, Katie Smith, brought the office together to make brown paper sacks filled with a peanut butter and jelly sandwich, Goldfish crackers, Welch’s fruit snacks, and a juice box. After packing up all of the lunches, Katie and a few volunteers delivered them to the Marietta MUST Ministries location for their Summer Lunch Program. Many families rely on a free school lunch for their children, therefore many of these children go hungry during the summer months. MUST Ministries has stepped in by providing a nutritious lunch each summer weekday to thousands of children in seven counties. Overall, it was a fun task for an incredible cause! To learn more, visit: https://www.mustministries.org/summer-lunch#.WXZC9ITytph

 

Friday, July 21st, 2017

Summer Leadership Program 2017

M&J’s 2nd Annual Summer Leadership Program was full of fun and fantastic attendees! Hosted in Athens, GA, the group had two days packed with games, social outings, and information all about Mauldin & Jenkins and what it’s like to work here. Our diverse group of 34 attendees included students from UNG, GSU, UGA, GCSU, UTC, Clemson, Furman, UT, Armstrong University, UCF, AU, Stetson University, Presbyterian College, UA, KSU, and USC.

The group had the opportunity to hear from our industry leaders, meet in small groups with M&J employees, and learn from members of our mentorship, community service, and SAFE programs. Big thanks to all our participants who made the event such a success!

 

 

 

 

 

Friday, July 21st, 2017

Nonprofits: Harness the power of the personal appeal

You’ve probably heard it before: People don’t give to causes — they give to those asking on behalf of a cause. That’s why a personal appeal continues to be such a powerful not-for-profit fundraising tool. In fact, requests from friends or family members typically drive most charitable donations. By appealing to their networks, board members can be particularly effective fundraisers.

4 strategies

Here are some time-tested strategies for improving the effectiveness of your board’s outreach:

1. Humanize the appeal. Say that your charity raises money for cancer treatment. If board members have been impacted by the disease, they might want to relate their personal experiences as a means of illustrating why they support the organization’s work.

2. Emphasize benefits. Even when appealing to potential donors’ philanthropic instincts, it’s important to mention other possible benefits. For example, if your organization is trying to encourage local business owners to attend a charity event, board members should promote the event’s networking opportunities and public recognition (if applicable).

3. Meet face-to-face. Letters and email can help save time, but face-to-face appeals are more effective. This is especially true if your nonprofit offers donors something in exchange for their attention. For instance, they’re more likely to be swayed at a coffee hour or cocktail gathering hosted by a board member.

4. Present a wish list. Your organization should provide board members with a wish list of specific items or services needed. They can offer supporters the opportunity to donate a purchased item or make an in-kind donation.

Never-ending challenge

Fundraising is a never-ending challenge for most nonprofits. Contact us for more information on effective fundraising strategies.

© 2017

Thursday, July 20th, 2017

Nonqualified stock options demand tax planning attention

Your compensation may take several forms, including salary, fringe benefits and bonuses. If you work for a corporation, you might also receive stock-based compensation, such as stock options. These come in two varieties: nonqualified (NQSOs) and incentive (ISOs). With both NQSOs and ISOs, if the stock appreciates beyond your exercise price, you can buy shares at a price below what they’re trading for.

The tax consequences of these types of compensation can be complex. So smart tax planning is critical. Let’s take a closer look at the tax treatment of NQSOs, and how it differs from that of the perhaps better known ISOs.

Compensation income

NQSOs create compensation income — taxed at ordinary-income rates — on the “bargain element” (the difference between the stock’s fair market value and the exercise price) when exercised. This is regardless of whether the stock is held or sold immediately.

ISOs, on the other hand, generally don’t create compensation income taxed at ordinary rates unless you sell the stock from the exercise without holding it for more than a year, in a “disqualified disposition.” If the stock from an ISO exercise is held more than one year, then generally your lower long-term capital gains tax rate applies when you sell the stock.

Also, NQSO exercises don’t create an alternative minimum tax (AMT) preference item that can trigger AMT liability. ISO exercises can trigger AMT unless the stock is sold in a disqualified disposition (though it’s possible the AMT could be repealed under tax reform legislation).

More tax consequences to consider

When you exercise NQSOs, you may need to make estimated tax payments or increase withholding to fully cover the tax. Otherwise you might face underpayment penalties.

Also keep in mind that an exercise could trigger or increase exposure to top tax rates, the additional 0.9% Medicare tax and the 3.8% net investment income tax (NIIT). These two taxes might be repealed or reduced as part of Affordable Care Act repeal and replace legislation or tax reform legislation, possibly retroactive to January 1 of this year. But that’s still uncertain.

Have tax questions about NQSOs or other stock-based compensation? Let us know — we’d be happy to answer them.

© 2017

Thursday, July 13th, 2017

When does your nonprofit owe UBIT on investment income?

In recent years, the IRS has increased its scrutiny of not-for-profits’ unrelated business income (UBI). Dividends, interest, rents, annuities and other investment income generally are excluded when calculating unrelated business income tax (UBIT). However, there are two exceptions where such income is taxable.

1. Debt-financed property

When your nonprofit incurs debt to acquire an income-producing asset, the portion of the income or gain that’s debt-financed is generally taxable UBI. Such assets are usually real estate, but could also be stocks, tangible personal property or other investments purchased with borrowed funds. Income-producing property is debt-financed if, at any time during the tax year, it had outstanding “acquisition indebtedness.”

But certain property isn’t considered debt-financed and therefore is exempt from this treatment. Examples include when:

  • 85% or more of the property’s use is substantially related to your nonprofit’s exempt purpose,
  • The property is used in a trade or business that’s excluded from the definition of “unrelated trade or business” either because it’s used in research activities or because the activity has a volunteer workforce, is conducted for the convenience of members, or consists of selling donated merchandise, or
  • It’s covered by the neighborhood land rule.

What is the neighborhood land rule? If your nonprofit acquires real property intending to use it for exempt purposes within 10 years, the property won’t be treated as debt-financed property as long as it’s in the neighborhood of other property you use for exempt purposes.

2. Income from controlled organizations

Interest, rents, annuities and other investment income aren’t excluded from UBI if they are received from a for-profit subsidiary or controlled nonprofit. Such payments are included in the parent organization’s taxable UBI to the extent that they reduce the subsidiary organization’s net taxable income or UBI. The IRS generally considers a corporation to be “controlled” if the other organization owns more than 50% of the “beneficial interest” (either stock in a for-profit or voting board positions in a nonprofit).

Proceed with caution

Failing to pay UBIT on debt-financed property or income from controlled organizations could have serious consequences, ranging from taxes, penalties, and interest to the loss of your tax-exempt status. Contact us for more information on UBIT rules.

© 2017

Wednesday, July 12th, 2017

Own a vacation home? Adjusting rental vs. personal use might save taxes

Now that we’ve hit midsummer, if you own a vacation home that you both rent out and use personally, it’s a good time to review the potential tax consequences:

If you rent it out for less than 15 days: You don’t have to report the income. But expenses associated with the rental (such as advertising and cleaning) won’t be deductible.

If you rent it out for 15 days or moreYou must report the income. But what expenses you can deduct depends on how the home is classified for tax purposes, based on the amount of personal vs. rental use:

  • Rental property. If you (or your immediate family) use the home for 14 days or less, or under 10% of the days you rent out the property, whichever is greater, the IRS will classify the home as a rental property. You can deduct rental expenses, including losses, subject to the real estate activity rules. You can’t deduct any interest that’s attributable to your personal use of the home, but you can take the personal portion of property tax as an itemized deduction.
  • Nonrental property. If you (or your immediate family) use the home for more than 14 days or 10% of the days you rent out the property, whichever is greater, the IRS will classify the home as a personal residence, but you will still have to report the rental income. You can deduct rental expenses only to the extent of your rental income. Any excess can be carried forward to offset rental income in future years. You also can take an itemized deduction for the personal portion of both mortgage interest and property tax.

Look at the use of your vacation home year-to-date to project how it will be classified for tax purposes. Adjusting the number of days you rent it out and/or use it personally between now and year end might allow the home to be classified in a more beneficial way.

For assistance, please contact us. We’d be pleased to help.

© 2017

Friday, July 7th, 2017

Emerging Tax and Regulation Alert: How a Tax Proposal Becomes a Law

Friday, July 7th, 2017

Summer is a good time to start your 2017 tax planning and organize your tax records

You may be tempted to forget all about taxes during summertime, when “the livin’ is easy,” as the Gershwin song goes. But if you start your tax planning now, you may avoid an unpleasant tax surprise when you file next year. Summer is also a good time to set up a storage system for your tax records. Here are some tips:

Take action when life changes occur. Some life events (such as marriage, divorce, or the birth of a child) can change the amount of tax you owe. When they happen, you may need to change the amount of tax withheld from your pay. To do that, file a new Form W-4 with your employer. If you make estimated payments, those may need to be changed as well.

Keep records accessible but safe. Put your 2016 tax return and supporting records together in a place where you can easily find them if you need them, such as if you’re ever audited by the IRS. You also may need a copy of your tax return if you apply for a home loan or financial aid. Although accessibility is important, so is safety.

A good storage medium for hard copies of important personal documents like tax returns is a fire-, water- and impact-resistant security cabinet or safe. You may want to maintain a duplicate set of records in another location, such as a bank safety deposit box. You can also store copies of records electronically. Simply scan your documents and save them to an external storage device (which you can keep in your home safe or bank safety deposit box). If opting for a cloud-based backup system, choose your provider carefully to ensure its security measures are as stringent as possible.

Stay organized. Make tax time easier by putting records you’ll need when you file in the same place during the year. That way you won’t have to search for misplaced records next February or March. Some examples include substantiation of charitable donations, receipts from work-related travel not reimbursed by your employer, and documentation of medical expenses not reimbursable by insurance or paid through a tax-advantaged account.

For more information on summertime tax planning or organizing your tax-related information, contact us.

© 2017