Not-for-Profit Tax-Exempt Status

Randy ChmTax News

One of the worst things that can happen to a not-for-profit organization is to have its tax-exempt status revoked. Among other consequences, the nonprofit may lose credibility with supporters and the public, and donors will no longer be able to make tax-exempt contributions. Although loss of exempt status isn’t common, certain activities can increase your risk significantly.  

Overtime Rules

Randy ChmTax News

The U.S. Department of Labor (DOL) has released the finalized rule on overtime exemptions for white-collar workers under the Fair Labor Standards Act. The rule updates the standard salary levels for the first time since 2004. While it is expected to expand the pool of nonexempt workers by more than 1 million, it’s also more favorable to employers than a rule proposed by the Obama administration in 2016.  

Unemployment Tax Costs

Del YounglasTax News

As an employer, you must pay federal unemployment tax (FUTA) on amounts up to $7,000 paid to each employee as wages during the calendar year. The rate of tax imposed is 6% but can be reduced by a credit (described below). Most employers end up paying an effective FUTA tax rate of 0.6%. An employer taxed at a 6% rate would pay FUTA tax of $420 for each employee who earned at least $7,000 per year, while an employer taxed at 0.6% pays $42.  

Divorce Decree

Randy ChmTax News

Divorcing or separating taxpayers need to be aware of how the breakup of a marriage may affect their 2019 tax returns. The tax treatment of alimony and separation payments changed for divorce and separation agreements that occurred (or, in some cases, were modified) after 2018.  

Nanny Tax

Randy ChmTax News

You may have heard of the “nanny tax.” But even if you don’t employ a nanny, it may apply to you. Hiring a housekeeper, gardener or other household employee (who isn’t an independent contractor) may make you liable for federal income and other taxes. You may also have state tax obligations.  

Roth IRA Conversion

Randy ChmTax News

Roth IRAs offer significant estate planning and financial benefits. If you have a substantial balance in a traditional IRA and are considering converting it to a Roth IRA, there may be no better time than now. The Tax Cuts and Jobs Act (TCJA) reduced individual income tax rates through 2025. By making the conversion now, the TCJA enhances the benefits of a Roth IRA.  

Mergers and Acquisitions (M&A)

Randy ChmTax News

If you’re considering buying or selling a business — or you’re in the process of a merger or acquisition — it’s important that both parties report the M&A transaction to the IRS in the same way. Otherwise, you may increase your chances of being audited.  

Home Equity Loan Rules

Randy ChmTax News

Passage of the Tax Cuts and Jobs Act (TCJA) in December 2017 has led to confusion over some of the changes to longstanding deductions, including the deduction for interest on home equity loans. In response, the IRS has issued a statement clarifying that the interest on home equity loans, home equity lines of credit and second mortgages will, in many cases, remain deductible under the TCJA — regardless of how the loan is labeled.  

Tax Payer First Act

Randy ChmTax News

The U.S. Senate has passed, and President Trump is expected to sign into law, a broad package of reforms aimed at the IRS. Among other things, the Taxpayer First Act contains several new protections for taxpayers, along with provisions intended to improve the IRS’s customer service.  

Payroll Tax Penalty

Del YounglasTax News

If federal income tax and employment taxes (including Social Security) are withheld from employees’ paychecks and not handed over to the IRS, a harsh payroll tax penalty can be imposed. To make matters worse, the penalty can be assessed personally against a “responsible individual.”