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Wednesday, January 31st, 2018

University of South Carolina Recruitment

Adrienne Berg from our Columbia office was invited to participate on a Fraud Panel, hosted by Beta Alpha Psi at the University of South Carolina. Students were encouraged to ask questions after topics were brought up and discussed by the panel. After the session, BAP hosted its Summer Leadership Showcase. It was a great event, and we are looking forward to a few students from USC attending M&J’s Summer Leadership Program, July 17-18!


Wednesday, January 31st, 2018

State and local sales tax deduction remains, but subject to a new limit

Individual taxpayers who itemize their deductions can deduct either state and local income taxes or state and local sales taxes. The ability to deduct state and local taxes — including income or sales taxes, as well as property taxes — had been on the tax reform chopping block, but it ultimately survived. However, for 2018 through 2025, the Tax Cuts and Jobs Act imposes a new limit on the state and local tax deduction. Will you benefit from the sales tax deduction on your 2017 or 2018 tax return?

Your 2017 return

The sales tax deduction can be valuable if you reside in a state with no or low income tax or purchased a major item in 2017, such as a car or boat. How do you determine whether you can save more by deducting sales tax on your 2017 return? Compare your potential deduction for state and local income tax to your potential deduction for state and local sales tax.

This isn’t as difficult as you might think: You don’t have to have receipts documenting all of the sales tax you actually paid during the year to take full advantage of the deduction. Your deduction can be determined by using an IRS sales tax calculator that will base the deduction on your income and the sales tax rates in your locale plus the tax you actually paid on certain major purchases (for which you will need substantiation).

Your 2018 return

Under the TCJA, for 2018 through 2025, your total deduction for all state and local taxes combined — including property tax — is limited to $10,000. You still must choose between deducting income and sales tax; you can’t deduct both, even if your total state and local tax deduction wouldn’t exceed $10,000.

Also keep in mind that the TCJA nearly doubles the standard deduction. So even if itemizing has typically benefited you in the past, you could end up being better off taking the standard deduction when you file your 2018 return.

So if you’re considering making a large purchase in 2018, you shouldn’t necessarily count on the sales tax deduction providing you significant tax savings. You need to look at what your total state and local tax liability likely will be, as well as whether your total itemized deductions are likely to exceed the standard deduction.

Questions?

Let us know if you have questions about whether you can benefit from the sales tax deduction on your 2017 return or about the impact of the TCJA on your 2018 tax planning. We’d be pleased to help.

© 2018


Wednesday, January 24th, 2018

Collaborating for a cause: Nonprofit alliances

Countless nonprofits have partnered up for strength and survival in recent years. But the success of these arrangements depends on careful planning and oversight.

Types of partnering

There are many types of partnership arrangements between nonprofit organizations. But the two terms you’ll hear most often are:

1. Strategic alliance. This is a blanket term typically used to represent a wide range of affiliations. A strategic alliance can involve a relationship with another nonprofit, a for-profit or a governmental entity. Such alliances can take the form of joint programming, collective impact collaborations, cost sharing and many other arrangements.

2. Joint venture. A joint venture is a specific type of strategic alliance involving a contractual arrangement with another nonprofit, a for-profit entity or a governmental agency. The two entities become engaged in a solitary enterprise without incorporating or forming a legal partnership. A joint venture is otherwise similar to a business partnership, except that the relationship typically has a single focus and is often temporary.

No matter what type of alliance you make, many of the considerations are the same. To select the appropriate partnership model, examine your motivation for linking up. Do you want to save money by sharing administrative expenses? Will the union enable you to expand your reach? Will the collaboration involve a single initiative or involve multiple projects over a long period?

Read the rest of this entry »


Tuesday, January 23rd, 2018

Can you deduct home office expenses?

Working from home has become commonplace. But just because you have a home office space doesn’t mean you can deduct expenses associated with it. And for 2018, even fewer taxpayers will be eligible for a home office deduction.

Changes under the TCJA

For employees, home office expenses are a miscellaneous itemized deduction. For 2017, this means you’ll enjoy a tax benefit only if these expenses plus your other miscellaneous itemized expenses (such as unreimbursed work-related travel, certain professional fees and investment expenses) exceed 2% of your adjusted gross income.

For 2018 through 2025, this means that, if you’re an employee, you won’t be able to deduct any home office expenses. Why? The Tax Cuts and Jobs Act (TCJA) suspends miscellaneous itemized deductions subject to the 2% floor for this period.

If, however, you’re self-employed, you can deduct eligible home office expenses against your self-employment income. Therefore, the deduction will still be available to you for 2018 through 2025.

Read the rest of this entry »


Monday, January 22nd, 2018

IRS issues updated 2018 withholding tables

In the wake of passage of the Tax Cuts and Jobs Act (TCJA) late last year, the IRS has taken one of the first critical steps to institute the law’s overhaul of the federal income tax regime. The IRS has released updated withholding tables that indicate how much employers should hold back from their employees’ paychecks to satisfy workers’ tax obligations. The new tables may provide the correct amount of tax withholding for individuals with simple tax situations, but they’ll likely cause other taxpayers to not have enough withheld to pay their ultimate tax liabilities under the TCJA.

New withholding tables

The revised IRS withholding tables reflect the TCJA’s increase in the standard deduction, suspension of personal exemptions and changes in tax rates and brackets.

The law roughly doubles the 2017 standard deduction amounts to $12,000 for single filers and $24,000 for joint filers. It also temporarily eliminates personal exemptions, which taxpayers previously could claim for themselves, their spouses and any dependents. (The personal exemption amount for each such individual was $4,050 in 2017.) And the TCJA adjusts the taxable income thresholds and tax rates for seven income tax brackets.

Employers and payroll services use the withholding tables to determine the amount to withhold from employees’ paychecks in light of their wages, marital status and number of withholding allowances. Employees provide this information on their Forms W-4.

The new withholding tables are designed to work with the Forms W-4 that employers already have on file for their employees. In other words, employees don’t need to complete any new forms or take any other action at this time.

Employers, on the other hand, must move to incorporate the new tables into their payroll systems as soon as possible — and no later than February 15, 2018. They should continue to use the 2017 withholding tables until they adopt the new figures.

A big caveat

The IRS expects that many employees will see increases in their paychecks after the new tables are instituted in February, but it’s possible that some taxpayers could find themselves unexpectedly slammed with bigger income tax bills when it comes time to file their 2018 tax returns. That’s because, in addition to cutting tax rates, the TCJA eliminates or restricts many of the popular tax deductions those taxpayers have claimed on their returns in past years.

For example, beginning in 2018, taxpayers who itemize can claim a deduction of no more than $10,000 for the aggregate of state and local property taxes and income or sales taxes. These taxpayers also can deduct mortgage interest on debt of only $750,000 ($1 million for mortgage debt incurred before December 15, 2017) and can’t deduct any interest on home equity debt, even if the debt existed before the TCJA was enacted. The higher standard deduction and expansion of family tax credits may offset the loss of these and other deductions — as well as personal exemptions — but taxpayers won’t know for certain until they actually prepare their 2018 returns in 2019.

The IRS itself cautions that people with “more complicated tax situations” face the possibility of having their income taxes underwithheld. If you itemize your deductions, are married and you and your spouse have multiple jobs or if you have more than one job per year, you should review your tax situation and adjust your withholding allowances as appropriate. Note that it’ll be up to taxpayers to alert their employers of the need to make adjustments to avoid the under- or overwithholding of taxes from their paychecks.

The IRS is updating its withholding calculator (available at irs.gov) to assist taxpayers in reviewing their situations and expects the new calculator to be available by the end of February. The calculator will reflect changes in available itemized deductions, the increased child tax credit, the new dependent credit and repeal of dependent exemptions.

Beyond income taxes

Of course, paychecks also are subject to withholding for non-income taxes. Specifically, wages are subject to withholding for Social Security and Medicare taxes (known as FICA taxes), too.

For 2018, the employee’s share of the Social Security tax is 6.2% of the first $128,400 of taxable earnings. The employee share of the Medicare tax is 1.45% of all taxable earnings. Taxpayers with taxable earnings of more than $200,000 for individuals or $250,000 for couples also are subject to a Medicare surtax of 0.9%.

Better safe than sorry

If you’re subject to withholding, you’d be wise to check your situation by consulting with your tax advisor or by using the revised IRS withholding calculator once it becomes available. However, those who rely solely on the new withholding tables run the risk of dramatically under- or overwithholding on their taxes. At best, that means they extend the federal government no-interest loans of their hard-earned income; at worst, they could end up on the hook for far greater taxes — plus penalties — when they file their 2018 tax returns. We can help you plan now for all of the changes in the new tax law.

© 2018


Friday, January 19th, 2018

Fun fact: This isn’t the first time the tax season has been delayed.


Wednesday, January 17th, 2018

What nonprofits need to know about the new tax law

The number of taxpayers who itemize deductions on their federal tax return — and, thus, are eligible to deduct charitable contributions — is estimated by the Tax Policy Center to drop from 37% in 2017 to 16% in 2018. That’s because the recently passed Tax Cuts and Jobs Act (TCJA) substantially raises the standard deduction. Many not-for-profit organizations are understandably worried about how this change will affect donations. But this isn’t the only TCJA provision that affects nonprofits.

Donors have fewer incentives

In addition to reducing smaller-scale giving by shrinking the pool of people who itemize, the TCJA might discourage major contributions. The law doubles the estate tax exemption to $10 million (indexed for inflation) through 2025. Some wealthy individuals who make major gifts to shrink their taxable estates won’t need to donate as much to reduce or eliminate their potential estate tax.

UBIT takes a bigger bite

The new law mandates that nonprofits calculate their unrelated business taxable income (UBTI) separately for each unrelated business. As a result, they can’t use a deduction from one unrelated business to offset income from another unrelated business for the same tax year. However, they can generally use one year’s losses on an unrelated business to reduce their taxes for that business in a different year. The TCJA also includes in UBTI expenses used to provide certain transportation-related and other benefits. So, the unrelated business income tax (UBIT) a nonprofit must pay could go up.

High compensation risks new tax

Nonprofits with highly compensated executives may now potentially face a 21% excise tax. The tax applies to the sum of any compensation (including most benefits) in excess of $1 million paid to a covered employee plus certain large payments made to that employee when he or she leaves the organization, known as “parachute” payments. The excise tax applies to the amount of the parachute payment less the average annual compensation.

Bond interest exemption revoked

The TCJA repeals the tax-exempt treatment for interest paid on tax-exempt bonds issued to repay another bond in advance. An advance repayment bond is used to pay principal, interest or redemption price on an earlier bond prior to its redemption date.

Be informed

Note that other rules and limits may apply. We can provide you with a detailed picture of the new tax law and explain how it’s likely to affect your organization.

© 2018


Tuesday, January 16th, 2018

M&J’s First Women’s Alliance

We hosted our Inaugural Women’s Alliance Meeting yesterday, January 15 at the Atlanta office. Aleisa Howell, a Partner in the Atlanta office, headed this initiative and was the meeting’s first speaker. All the women in the Atlanta office were invited to attend along with Jeff Fucito, Atlanta’s Partner-in-Charge, Donny Luker, acting Managing Partner, and Hanson Borders, Managing Partner Elect.

“We are very excited to announce the Mauldin & Jenkins Women’s Alliance,” said Howell. “The Alliance will support women with their career development and leadership opportunities.”

 

 

 

 

 

 


Monday, January 15th, 2018

Tax Cuts and Job Acts

The tax experts at Mauldin & Jenkins conducted a Tax Reform Seminar on Thursday, January 11th.  Seminar attendees learned how the new reform will impact them individually and their companies.  To hear how you will be impacted, listen to the Individual’s Seminar.

Find the complete powerpoint here!

 


Wednesday, January 10th, 2018

Conflict-of-interest checklist for nonprofits

Not-for-profit board officers, directors, trustees and key employees must avoid conflicts of interest because it’s their duty to do so. Any direct or indirect financial interest in a transaction or arrangement that might benefit one of these individuals personally could result in the loss of your organization’s tax-exempt status — and its reputation.

Here’s a quick checklist to gauge whether your nonprofit is doing what it takes to avoid conflicts of interest:

Do you have a conflict-of-interest policy in place that specifies what constitutes a conflict and lists exceptions?
Do you require board officers, directors, trustees, and key employees to annually pledge to disclose interests, relationships and financial holdings that could result in a conflict of interest?
Do they understand that they must speak up if issues arise that could pose a possible conflict?
Do you provide training in conflicts of interest?
Do you have procedures in place that outline the steps you’ll take when a possible conflict of interest arises?
Are individuals with possible conflicts asked to present only the facts, and then remove themselves from any discussion of the issue?
Do you keep minutes of the meetings where the conflict of interest is discussed, noting those members present and voting, and indicating the final decision reached?
Do you put projects out for bid — with identical specifications — to multiple vendors?
Do you supply a written contract to each vendor that details the service the company will provide, specific deliverables, cost estimates and a time frame for delivery?
If you answered “no” to any of these questions, contact us. We can help you make sure that you have an adequate conflict-of-interest policy in place and a full set of procedures to support it.

© 2018