Archive for the ‘Uncategorized’ Category

Wednesday, December 27th, 2017

Christmas In Chattanooga!

Chattanooga enjoyed bringing Christmas cheer for 19 local foster children! The office raised just over $3000 to purchase gifts and ensure each of those children had a very, merry Christmas!

Wednesday, December 27th, 2017

Which board structure is right for your nonprofit?

Not-for-profit boards can vary widely, with different responsibilities and expectations for their members. The structure, for example, can be anything from a less-involved group that takes its direction from the organization’s leader, to a fully functioning, hands-on board that essentially runs the nonprofit, to boards that fit somewhere in between.

The right board structure depends largely on what your nonprofit needs and where it is in its life cycle.

3 types

The most common types of nonprofit boards are:

1. Policy. Policy boards are dedicated to oversight and governance. They’re appropriate for nonprofits that are staffed by employees or volunteers. Day-to-day duties are handled by those individuals, and the board provides a system of checks and balances that keeps the organization on track.

2. Working. These boards often are found in early-stage organizations or in nonprofits where there’s plenty to do, but not enough hands to do it. Members of working boards could be tasked with everything from defining a long-term funding strategy to stuffing goodie bags for a fundraiser. They must be willing to do grunt work and switch to a more strategic mindset when necessary

3. Hybrid. It’s not unusual for nonprofits to start out with working boards and then transition to a policy-style board as they gain employees and volunteers. In some cases, certain hands-on tasks — such as sourcing and hiring executive staff — may remain the purview of an otherwise strictly policy board.

Define but remain flexible

There are advantages to defining the type of board you have — or want to have. First, it helps you to recruit appropriate board members, because candidates will know exactly what’s expected of them in terms of time and resources. Second, board and staff will work together more efficiently when everyone is clear about their responsibilities.

As your organization grows and changes, the structure of your board may need to change with it. Just as many growing nonprofits shift from a working to a policy board, a policy board may need to take on a more hands-on role in times of crisis — for example, when an executive director abruptly leaves.

Contact us if you have questions about board structure or other nonprofit governance topics.

© 2017

Wednesday, December 27th, 2017

Another CPA Exam Bites the Dust!

Congratulations to Sarah Landry, Brian Nicholson, and Tanner Smith for passing their CPA exams!

 

 

Friday, December 22nd, 2017

New tax law brings big changes for individual taxpayers

The reconciled tax reform bill, commonly called the “Tax Cuts and Jobs Act” (TCJA), is the most sweeping federal tax legislation in more than three decades. While many of the new law’s provisions affect businesses, it also includes significant changes for individual taxpayers, most of which take effect for 2018 and expire after 2025. Here are some of the most notable changes.

Inflation adjustments

Under the TCJA, annual inflation adjustments will be calculated using the chained consumer price index (also known as C-CPI-U). This will increase tax bracket thresholds, the standard deduction, certain exemptions and other figures at a slower rate than is the case with the consumer price index currently used, potentially pushing taxpayers into higher tax brackets and making various breaks worth less over time. The law adopts the C-CPI-U on a permanent basis.

Tax brackets

The TCJA maintains seven income tax brackets but temporarily adjusts the tax rates as follows:

2017 2018-2025
10% 10%
15% 12%
25% 22%
28% 24%
33% 32%
35% 35%
39.6% 37%

The top rates, which currently kick in at $418,400 of taxable income for single filers and $470,700 for joint filers, will now take effect at $500,000 and $600,000, respectively. The brackets will continue to be adjusted for inflation.

Personal exemptions and standard deduction

For 2017, taxpayers can claim a personal exemption of $4,050 each for themselves, their spouses and any dependents. If they choose not to itemize deductions, they can also take a standard deduction based on their filing status: $6,350 for singles and separate filers, $9,350 for head of household filers, and $12,700 for married couples filing jointly.

For 2018–2025, the TCJA suspends personal exemptions but roughly doubles the standard deduction amounts to $12,000 for singles and separate filers, $18,000 for heads of households, and $24,000 for joint filers. The standard deduction amounts will be adjusted for inflation beginning in 2019.

For some taxpayers, the increased standard deduction could compensate for the elimination of the exemptions, and perhaps even provide some additional tax savings.

But for those with many dependents or who itemize deductions, these changes might result in a higher tax bill — depending in part on the extent to which they can benefit from the family tax credits.

Family tax credits

The child credit was the subject of much debate during the reconciliation process, with some senators pushing to expand it more than either the original House of Representatives and Senate bills did. In the end, the negotiators opted to double the credit to $2,000 per child under age 17 beginning in 2018. The maximum amount refundable (because a taxpayer’s credits exceed his or her tax liability) is limited to $1,400 per child.

The TCJA also makes the child credit available to more families than in the past. Under the new law, the credit doesn’t begin to phase out until adjusted gross income exceeds $400,000 for married couples or $200,000 for all other filers, compared with the 2017 phaseouts of $110,000 and $75,000. The phaseout thresholds won’t be indexed for inflation, though, meaning the credit will lose value over time.

The TCJA also includes, beginning in 2018, a $500 nonrefundable credit for qualifying dependents other than qualifying children (for example, a taxpayer’s 17-year-old child, parent, sibling, niece or nephew, or aunt or uncle).

These provisions all expire after 2025.

State and local tax deduction

The deduction for state income and sales taxes was another bone of contention, with congressional representatives from high-tax states protesting its proposed elimination. The deduction ultimately survived but has been scaled back substantially — and, of course, is available only to those who choose to itemize. With the increased standard deduction, it’s expected that fewer taxpayers will do so.

For 2018–2025, taxpayers can claim a deduction of no more than $10,000 for the aggregate of state and local property taxes and either income or sales taxes. Note, though, that the TCJA explicitly forbids taxpayers from claiming an itemized deduction in 2017 for prepayment of state or local income tax for a future year to avoid the dollar limitation applicable for future tax years. It doesn’t, however, include such a prohibition against prepayment of property taxes for a future year.

Mortgage interest deduction

The TCJA tightens limits on the itemized deduction for home mortgage interest. For 2018–2025, it generally allows a taxpayer to deduct interest only on mortgage debt of up to $750,000. However, the limit remains at $1 million for mortgage debt incurred before December 15, 2017, which will significantly reduce the number of taxpayers affected.

The new law also suspends the deduction for interest on home equity debt: For 2018–2025, taxpayers can’t claim deductions for such interest at all, regardless of when the debt was incurred or how it’s used.

Additional deductions, exclusions and credits

Here are some other tax breaks that have been affected by the TCJA:

Medical expense deduction. This itemized deduction lives on and is, in fact, enhanced for two years. The threshold for deducting such unreimbursed expenses is reduced from 10% of adjusted gross income (AGI) to 7.5% for all taxpayers for both regular and alternative minimum tax (AMT) purposes in 2017 and 2018. You may want to bunch eligible expenses into 2018 to the extent possible to maximize your deduction.

Miscellaneous itemized deductions subject to the 2% floor. This deduction for expenses such as certain professional fees, investment expenses and unreimbursed employee business expenses is suspended for 2018–2025. If you’re an employee and work from home, this includes the home office deduction.

Moving expenses. The deduction for work-related moving expenses is suspended for 2018–2025, except for active-duty members of the Armed Forces (and their spouses or dependents) who move because of a military order that calls for a permanent change of station.

For 2018–2025, the exclusion from gross income and wages for qualified moving expense reimbursements is also suspended, again except for active-duty members of the Armed Forces who move pursuant to a military order.

Personal casualty and theft loss deduction. For 2018–2025, this deduction is suspended except if the loss was due to an event officially declared a disaster by the President.

Charitable contributions. For 2018–2025, the limit on the deduction for cash donations to public charities is raised to 60% of AGI from 50%. However, charitable deductions for payments made in exchange for college athletic event seating rights are eliminated. Also keep in mind that you must itemize to benefit from the charitable contributions deduction.

Alimony payments. Alimony payments won’t be deductible — and will be excluded from the recipient’s taxable — for divorce agreements executed (or, in some cases, modified) after December 31, 2018. Because the recipient spouse would typically pay income taxes at a rate lower than the paying spouse, the overall tax bite will likely be larger under this new tax treatment. This change is permanent.

529 plan savings plans. 529 plan distributions used to pay qualifying education expenses are generally tax-free. The definition of qualified education expenses has been expanded to include not just postsecondary school expenses but also primary and secondary school expenses. This change is permanent.

Notably, the TCJA leaves untouched many breaks that would have been reduced or eliminated under the original House or Senate bills, such as the:

  • Principal residence gain exclusion,
  • Exclusion for employer-provided adoption assistance,
  • Lifetime Learning credit,
  • Deduction for student loan interest, and
  • Deduction for graduate student tuition waivers.

Also on the plus side, the law suspends the overall limitation on itemized deductions for 2018–2025.

AMT and estate tax

The House lost the battle over repeal of the AMT and the estate tax — both continue to apply. But the TCJA makes them applicable to fewer taxpayers than in the past.

Beginning in 2018, the new law increases both the AMT exemption amount (to $109,400 for married couples, $70,300 for singles and heads of households, and $54,700 for separate filers) and the AMT exemption phaseout thresholds (to $1 million for married couples and $500,000 for all other taxpayers other than estates and trusts). These amounts will be adjusted for inflation until the provision expires after 2025.

Similarly, the TCJA doubles the estate tax exemption to $10 million for 2018–2025. The exemption is adjusted for inflation and is expected to be $11.2 million for 2018. But because the exemption doubling is only temporary, taxpayers with assets in the $5 million to $11 million range (twice that for married couples) will still have to keep estate taxes in mind in their planning.

Roth conversions

Taxpayers who convert a pretax traditional IRA into a posttax Roth IRA lose their ability to later “recharacterize” (that is, reverse) the conversion. Those who wish to recharacterize a 2017 Roth conversion must do so by December 31, 2017.

Recharacterization is still an option for other contributions, though. For example, an individual can make a contribution to a Roth IRA and subsequently recharacterize it as a contribution to a traditional IRA (before the applicable deadline).

Contact us with questions

As with any piece of massive legislation, many questions about implementation and impact linger unanswered. We’ll keep you apprised as more information becomes clear about how the TCJA will affect individual taxpayers.

© 2017

Thursday, December 21st, 2017

Congress passes biggest tax bill since 1986

On December 20, the House passed the reconciled tax reform bill, commonly called the “Tax Cuts and Jobs Act of 2017” (TCJA), which the Senate had passed the previous day. It’s the most sweeping tax legislation since the Tax Reform Act of 1986.

The bill makes small reductions to income tax rates for most individual tax brackets, significantly reduces the income tax rate for corporations and eliminates the corporate alternative minimum tax (AMT). It also provides a large new tax deduction for owners of pass-through entities and significantly increases individual AMT and estate tax exemptions. And it makes major changes related to the taxation of foreign income.

It’s not all good news for taxpayers, however. The TCJA also eliminates or limits many tax breaks, and much of the tax relief is only temporary.

Here is a quick rundown of some of the key changes affecting individual and business taxpayers. Except where noted, these changes are effective for tax years beginning after December 31, 2017.

Key changes affecting individuals

  • Drops of individual income tax rates ranging from 0 to 4 percentage points (depending on the bracket) to 10%, 12%, 22%, 24%, 32%, 35% and 37% — through 2025
  • Near doubling of the standard deduction to $24,000 (married couples filing jointly), $18,000 (heads of households), and $12,000 (singles and married couples filing separately) — through 2025
  • Elimination of personal exemptions — through 2025
  • Doubling of the child tax credit to $2,000 and other modifications intended to help more taxpayers benefit from the credit — through 2025
  • Elimination of the individual mandate under the Affordable Care Act requiring taxpayers not covered by a qualifying health plan to pay a penalty — effective for months beginning afterDecember 31, 2018
  • Reduction of the adjusted gross income (AGI) threshold for the medical expense deduction to 7.5% for regular and AMT purposes — for 2017 and 2018
  • New $10,000 limit on the deduction for state and local taxes (on a combined basis for property and income taxes; $5,000 for separate filers) — through 2025
  • Reduction to the mortgage debt limit for the home mortgage interest deduction, to $750,000 ($375,000 for separate filers), with certain exceptions — through 2025
  • Elimination of the deduction for interest on home equity debt — through 2025
  • Elimination of the personal casualty and theft loss deduction (with an exception for federally declared disasters) — through 2025
  • Elimination of miscellaneous itemized deductions subject to the 2% floor (such as certain investment expenses, professional fees and unreimbursed employee business expenses) — through 2025
  • Elimination of the AGI-based reduction of certain itemized deductions — through 2025
  • Elimination of the moving expense deduction (with an exception for members of the military in certain circumstances) — through 2025
  • Expansion of tax-free Section 529 plan distributions to include those used to pay qualifying elementary and secondary school expenses, up to $10,000 per student per tax year
  • AMT exemption increase, to $109,400 for joint filers, $70,300 for singles and heads of households, and $54,700 for separate filers — through 2025
  • Doubling of the gift and estate tax exemptions, to $10 million (expected to be $11.2 million for 2018 with inflation indexing) — through 2025

Key changes affecting businesses

  • Replacement of graduated corporate tax rates ranging from 15% to 35% with a flat corporate rate of 21%
  • Repeal of the 20% corporate AMT
  • New 20% qualified business income deduction for owners of flow-through entities (such as partnerships, limited liability companies and S corporations) and sole proprietorships — through 2025
  • Doubling of bonus depreciation to 100% and expansion of qualified assets to include used assets — effective for assets acquired and placed in service after September 27, 2017, and before January 1, 2023
  • Doubling of the Section 179 expensing limit to $1 million and an increase of the expensing phaseout threshold to $2.5 million
  • Other enhancements to depreciation-related deductions
  • New disallowance of deductions for net interest expense in excess of 30% of the business’s adjusted taxable income (exceptions apply)
  • New limits on net operating loss (NOL) deductions
  • Elimination of the Section 199 deduction, also commonly referred to as the domestic production activities deduction or manufacturers’ deduction — effective for tax years beginning after December 31, 2017, for noncorporate taxpayers and for tax years beginning afterDecember 31, 2018, for C corporation taxpayers
  • New rule limiting like-kind exchanges to real property that is not held primarily for sale
  • New tax credit for employer-paid family and medical leave — through 2019
  • New limitations on excessive employee compensation
  • New limitations on deductions for employee fringe benefits, such as entertainment and, in certain circumstances, meals and transportation

Year-end planning opportunities still available

We’ve only briefly covered some of the most significant TCJA provisions here. There are additional rules and limits that apply, and the law includes many additional provisions.

Also keep in mind that, as a result of the TCJA, you may have some last-minute year-end 2017 tax planning opportunities — but quick action (before January 1, 2018) will be needed. If you have questions about what you can do before year end to maximize your savings, or you’d like to learn more about how these and other tax law changes will affect you in 2018 and beyond, please contact us.

© 2017

Wednesday, December 20th, 2017

Member retention tips for nonprofits

For-profit businesses understand that it takes a lot more time and money to attract new customers than it does to keep current customers happy. The same can be said for your not-for-profit’s members. But there’s more to retention than cost savings. Long-time supporters help attract new members and are ideal candidates for leadership positions on boards and committees.

So, how do you keep members in the fold? Focus on needs, value and engagement.

Give the people what they need

It may seem pretty basic, but to keep members you have to offer something that they need: for example, education, networking opportunities, research, discounts or credentials. And the only sure way to get a handle on what your members need is to ask them.

Accomplish this through formal surveys, focus groups and online polls as well as by simply asking your members when you talk to them. How are your products and services meeting their needs? What do they need that you’re not providing? Needs aren’t static, so check in with members on an ongoing basis.

Emphasize value

Offering the right mix of products and services is a great first step. But you also must emphasize your organization’s value proposition. This is the unique experience that your members have when they interact with your nonprofit and its offerings.

Try making an emotional appeal that taps into the intangibles of being part of your group. Depending on your mission, you might tout the value of individuals banding together to create a powerful voice for change, the chance to help improve the conditions in your community or the ability to network with important thinkers.

Promote deep engagement

Members who are deeply involved will stick with your nonprofit. Create as many avenues as you can for members to participate as, for example, board and committee members, event managers, or publication contributors.

Treat your members as individuals whenever possible. Always address correspondence to them specifically (never to “member at large”) and offer them personalized content when they visit your website.

One last idea

This member-retention idea might be the easiest to implement: Offer multiyear memberships. Some people will opt for the simplicity of handling their membership paperwork once every two or three years rather than on an annual basis.

© 2017

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Wednesday, December 20th, 2017

Columbia’s Christmas Giving Tree!

M&J’s Columbia office collected and delivered Christmas gifts for a local family they “adopted” through Project Magi, a ministry of Columbia International University. Moni Cordell and a CIU representative were off to bring Christmas cheer thanks to the generosity of the Columbia office!

Tuesday, December 19th, 2017

401(k) retirement plan contribution limit increases for 2018; most other limits are stagnant

Retirement plan contribution limits are indexed for inflation, but with inflation remaining low, most of the limits remain unchanged for 2018. But one piece of good news for taxpayers who’re already maxing out their contributions is that the 401(k) limit has gone up by $500. The only other limit that has increased from the 2017 level is for contributions to defined contribution plans, which has gone up by $1,000.

Type of limit 2018 limit
Elective deferrals to 401(k), 403(b), 457(b)(2)
and 457(c)(1) plans
$18,500
Contributions to defined contribution plans $55,000
Contributions to SIMPLEs $12,500
Contributions to IRAs $5,500
Catch-up contributions to 401(k), 403(b), 457(b)(2)
and 457(c)(1) plans
$6,000
Catch-up contributions to SIMPLEs $3,000
Catch-up contributions to IRAs $1,000

If you’re not already maxing out your contributions to other plans, you still have an opportunity to save more in 2018. And if you turn age 50 in 2018, you can begin to take advantage of catch-up contributions.

Higher-income taxpayers should also be pleased that some limits on their retirement plan contributions that had been discussed as part of tax reform didn’t make it into the final legislation.

However, keep in mind that there are still additional factors that may affect how much you’re allowed to contribute (or how much your employer can contribute on your behalf). For example, income-based limits may reduce or eliminate your ability to make Roth IRA contributions or to make deductibletraditional IRA contributions.

If you have questions about how much you can contribute to tax-advantaged retirement plans in 2018, check with us.

© 2017

Monday, December 18th, 2017

Birmingham’s Christmas Party

The Birmingham team gathered at The Club on Thursday December 14th where they enjoyed each other’s company, delicious food and beverages. Everyone had a great time. Don’t they look great?!

 

Friday, December 15th, 2017

Columbia’s Christmas Party

The Columbia team is looking festive! Check out the fun pictures at their office Christmas party held last Friday at The Palmetto Club in downtown Columbia.