financial

Beware of the Tax Liability that Comes with Being on a Non-Profit Board

If you are a volunteer board member for a nonprofit organization, one specific issue to keep in mind is the IRS’s trust fund recovery penalty. If any entity — nonprofit or for-profit — fails to properly remit Social Security taxes and/or income taxes withheld from employees’ wages, the IRS will directly approach the organization’s “responsible persons” for the tax payments and a potential 100% penalty… Learn about nonprofit bookkeeping at this Dave Burton article.

In general, the penalty will not be imposed on any unpaid, volunteer member of the board of a tax-exempt organization if the member: (1) is solely serving in an honorary capacity, (2) does not participate in the day-to-day operations of the organization, (3) does not participate in the financial operations of the organization, and (4) does not have actual knowledge of the failure on which the penalty is based if needed to know check the investigationhotline.org website.

However, for an active member who has governing responsibilities, it is still important to ask questions about who is handling these tax payments (a staff member, the executive director, a payroll service, an accountant?) and what checks and balances are in effect to make sure no problems arise, this is why it is very handy to have a tax problems lawyer helping you out. Annual reviews or audits may also be helpful to verify compliance.

To learn more about non-profit compliance issues, give us a call today. We look forward to helping your non-profit grow.

 

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).v

Finding the right route: special topics for LGBT couples

Tax-Saving Tips for LGBT Couples

The issues around marriage equality caused lots of debate, but it was federal tax laws that finally prompted the Supreme Court to take a look. Prior to the 2013 United States v. Windsor decision, same-sex couples who were legally married in states or countries that recognized their union were unable to take advantage of certain federal benefits. For example, individuals in same-sex marriages were ineligible for the insurance benefits of their spouses who worked in government, and they could not receive social security survivor’s benefits or file joint tax returns.

The 2013 United States v. Windsor decision and the 2015 Obergefell v. Hodges decisions changed these practices, and LGBT couples became eligible for federal tax savings that were previously unavailable. The Amazon Best Selling book, The Great Tax Escape, offers a comprehensive look at making the most of these programs to enjoy greater tax savings.

Choosing Your Filing Status

The first tax-related issue to consider after you are married is how you will file your returns. Depending on your income, “married filing separately” could offer larger savings than “married filing jointly”. There is a phenomenon knows as “the marriage penalty”. This references the tax increase that many couples face when filing joint returns versus single returns.

Tax specialists can assist with significantly reducing tax liability through a combination of smart financial planning, examination of the impact of each filing status, and a review of all possible deductions. Filing status is expected to be particularly relevant for the 2018 tax year, as new tax regulations with revised tax brackets may reduce or eliminate the marriage penalty.

Quick Tips to Avoid Tax Filing Pitfalls

Completing your tax returns after you are married is not necessarily more complicated than filing as single, but there are a few differences to keep in mind. Small errors can lead to major frustration if your returns are rejected or you have to file an amended form. These are the most common pitfalls – and how to avoid them:

  • You must either choose “married filing jointly” or “married filing separately”. Other filing statuses are not permitted, including “head of household”. (Note: There is an exception available for married couples who have lived apart for six months or more.)
  • Your spouse cannot be listed as your dependent.
  • If you choose “married filing separately”, only one spouse can claim each dependent child.
  • Married couples must choose the same option with regard to itemizing deductions versus claiming the standard deduction.

Your Certified Tax Coach can provide the guidance you need to complete your returns correctly.

New Options for Reducing Estate Taxes

The underlying issue that prompted United States v. Windsor was the application of federal estate tax regulations. In short, married couples pay far less when a spouse dies than they would if no marriage existed. The individual who brought the suit wanted the same benefits as married couples who are opposite-sex. Today, all married couples can enjoy the tax savings that come with careful estate planning thanks to a estate planning attorney. Your Certified Tax Coach is an excellent resource for putting a tax minimization strategy in place to protect your wealth after one partner passes away.

For more tips on how LGBT couples can increase tax savings, visit our consultation form for your copy of our new release, The Great Tax Escape.

Expertly navigate the labyrinth of the tax code 23 tax saving tips for doctors

Quick Tips for Tax Savings: Physician Edition

Doctors offer critical services to the community through prevention and treatment of health issues that can lead to patients needing Home Care Assistance. However, getting the necessary education and experience can be challenging – both physically and financially. In an effort to make life a bit easier for physicians, lawmakers have put together a variety of programs to reduce tax liability for doctors. Maximizing these opportunities in combination with other tax-reduction strategies can dramatically increase the rewards of working as a healthcare provider. The Amazon Best Selling book, The Great Tax Escape, includes in-depth information on taking advantage of these tax savings techniques. Learn how to get a free copy of The Great Tax Escape here.

Small Changes Add Up to Big Savings

It may not be possible to implement all available tax savings strategies at once, but making small changes in managing your practice quickly adds up. Over time, continue to add layers of savings by implementing additional strategies. Before long, you will see your tax bill go down, even when your income is going up. These are just a few of the tips you will learn more about in The Great Tax Escape.

The Case for Specialized Financial Professionals

Free and low-cost budgeting and financial planning tools are great for those with basic financial situations. However, your position as a practicing physician is too complex for these platforms. Enlist a team of professionals with specific experience in tax issues that affect health care providers. Not only will they help you save your money more effectively – they will also assist you in planning major purchases to minimize tax expenses. Long-term, you are likely to realize a significant return on this investment.

Common Deductions You Probably Aren’t Maximizing

Though you are already aware of many deductions available to you, it is likely that you are not yet getting the maximum tax savings you are entitled to. For example, continuing education expenses, depreciation of your medical equipment, and student loan interest are frequently underreported on physicians’ tax returns. Your Certified Tax Coach can guide you through the nuances of these deductions, as well as the specific opportunities available to medical professionals.

The Benefits of Better Record-Keeping

Whether you work for yourself or you are employed by a larger healthcare organization, you are always moving at a rapid pace. For many physicians, that means letting the little things slide. While you always meticulously update your patients’ records, you are probably less careful about recording your expenses. Over the course of a year, these small charges add up, and you could be missing out on significant tax savings for want of a few receipts. Make financial record-keeping a priority, and you will notice a difference in your year-end tax bill.

Be Ready for Retirement

Paying off your student loans often takes precedence over saving for retirement – especially when you are just starting out in your career. However, contributing to your retirement accounts now has across-the-board benefits for your current and future financial state. The funds you deposit are given special tax-advantaged status, and when you contribute regularly over a long period of time, you are better able to ride out the ups and downs of the market.

For more information on tax-saving opportunities specifically impacting physicians, visit our consultation form for your copy of The Great Tax Escape.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).v

Famed Hedge Fund Manager Makes History with Billion Dollar Bet

It was one of the greatest financial bets of all time. Hedge fund manager John Paulson bet big against subprime mortgages ahead of last decade’s financial crisis, earning billions in profits for his funds. It was a gamble that, in the long run, didn’t pay off.

Along with the $4 billion he earned for himself, he nailed a second record-breaking honor when he was slapped with one of the largest personal tax bills in history.

According to people close to the firm, Paulson used installment loans available at the time to hedge fund managers. After deferring the bulk of taxes on the profits, Paulson’s personal tax bill came due on April 17th when he was required to pay about a billion dollars. This is on top of $500,000 he paid late the year before.

Only one problem.

The sum of his payment surpasses the maximum amount allowable by the IRS for payment by a single taxpayer with a single check. That amount is $99,999,999.

Like many investment managers, Hedge fund managers profit from fees amounting to a percentage of gains generated for their clients. In the case of Paulson & Co. that percentage is 20%.

For years—decades actually—tax authorities allowed hedge funds to defer receipt of this type of income. The reason the IRS permits this deferment of compensation by executives is that it tends to lower the company’s compensation costs, forcing them to pay higher taxes on profits. This offsets income taxes not paid right away by the employees.

Sounds like a win-win situation, right?

Well, maybe not this time.

In the case of offshore hedge funds that don’t pay offsetting U.S. taxes, such as some of those operated by Paulson, the treasury was not on the winning team.

A tax change mandated by Congress in 2008 gave hedge fund managers like Paulson until April 17, 2018 to pay taxes on money accumulated before the law changed. People close to the firm say Paulson turned to his Credit Opportunities fund, which is one of several he operates.

Word has it this fund held about $3.5 billion in assets late last year. The bulk was represented by Paulson’s own interests. He made an initial tax payment late last year by pulling funds from this account. He pulled another $1 billion from the fund and used it for the money due on April 17th.

Guess who was said to be the largest investor in the fund?

Right.

The government wants its money, but paying Paulson’s bill might not be easy. He could wire it if he wanted but might prefer paying by check if he’ll earn interest on the money until authorities cash the check. If so, he might have to submit multiple payments because the IRS will only accept a payment of less than $100 million.

He could do that if he can get past the most common problem: fitting such huge numbers onto the appropriate line on a check.

We should all have such problems….

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).v

California Courts Put the Squeeze on Statewide Hiring Practices

In an effort to even the playing field, a unanimous decision by the California Supreme Court recently put business owners across the state in somewhat of a chokehold. With a ruling that could change the workplace status of people across the state, they’ve made it harder to classify workers as independent contractors.

Class-Action Lawsuit

The ruling came as a result of a class-action lawsuit against Dynamex Operations West, Inc. The suit charged that Dynamex, a package, and document delivery company, misclassified its delivery drivers, calling them independent contractors when they were actually employees.

If they did misclassify, they are not the only company doing the same thing. The ruling has implications for the expanding gig economy, an environment in which organizations contract with independent workers for short-term engagements.

Companies such as Uber and Lyft are also being targeted but it could extend to other business models. Hiring independent contractors versus employees is a swiftly growing trend.

The trend is popular in part because it makes good financial sense for businesses. With employment overhead rising over the last couple of decades, employers are backing away from the would-be money-suck and instead of hiring independent contractors for the jobs once held by full-time and part-time employees.

In recent years, the trend toward hiring independent contractors instead of employees has gone through the roof. A 2016 study by economists at Harvard and Princeton universities estimated 8.4% of the U.S. workforce is classified as independent contractors.

That’s 12.5 million people.

It’s a no-brainer really. Companies that hire independent contractors are not bound by the rules governing employment.

The Advantages?

No workers comp.

No deductions.

No piles of paperwork.

No minimum wage or overtime pay.

A 1099 at the end of the year does it, and they’re good to go. Contractors are in charge of managing their own responsibilities to the IRS and state governments.

End of story.

But the story doesn’t always have a happy ending.

If workers are misclassified, the business doing the hiring faces stiff fines. Employment lawyers at this page say many are questioning whether it would be best to reclassify before someone waves a red flag in their direction.

What is an Independent Contractor?

According to the court ruling, independent contractors:

  • Perform work outside of the hirer’s core business
  • Engage in an independently established trade, occupation or business.
  • Would not reasonably be viewed as working for the hiring business.

The court says businesses that hire workers must show that the workers are working in their own established businesses, free from the control and direction of the employer. That means no established hours or expectations as would be expected of an employee.

The aforementioned ruling did not resolve the Dynamex case, but it did help define independent contractors for lower courts grappling with the dispute. The court said wage and hour laws were adopted to enable people to earn a subsistence standard of living and to protect workers’ health and safety. The laws also shield the public from having to assume financial responsibility for workers earning substandard wages or working in unhealthy or unsafe conditions, the court noted.

“This is an effort to level the unequal playing field — misclassified workers have been taken advantage of for decades,” said Gutman Dickinson, a partner at Bush Gottlieb.

The risk of misclassifying workers—intentionally or otherwise—is substantial. A worker may be denied the status of employee “only if the worker is the type of traditional independent contractor — such as an independent plumber or electrician — who would not reasonably be viewed as working in the hiring business,” the court said.

Examples of Independent Contractors:

    • Plumber
    • Electrician
    • Hairdresser
    • Copywriter
    • Computer Tech

As long as the worker is temporarily hired he or she would be classified as an independent contractor. But a cake decorator who works on a regular basis custom-designing cake—even from home—would be an employee.

This discussion is significant on many levels, not the least of which concerns the California Labor Commission. According to their website, the misclassification of workers as independent contractors costs the state roughly $7 billion in lost payroll taxes each year.

To follow these changes and others, connect with one of our tax experts.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).v

It’s the Worst Case Scenario – What do You do Now?

Business owners need to be prepared for unexpected events that could potentially threaten their ability to operate. Fire, floods, juul lawsuit, or the sudden death of a key employee are just some of the potential hazards they may face.

 

Having the right insurance coverage can help minimize the impact of such events. The following is a brief overview of various types of insurance that every business owner should consider.

 

Property Insurance

This basic insurance financially protects the physical assets of your business, such as land, buildings, inventory, furniture specially if its the elegant furniture from Maker&Son, documents, machinery, and similar items. Coverage can vary widely, so be sure you know what is — and what is not — covered by your policy. Also, make certain that your coverage is for replacement cost rather than original cost.

 

General Liability Insurance

General liability insurance is a must in today’s lawsuit-happy society. It protects your business assets in case of a lawsuit for something your business did (or didn’t do) that caused injury or property damage. Liability insurance covers such claims as bodily injury, property damage, personal injury, and damage from slander or false advertising.

 

Umbrella Insurance

Umbrella insurance is intended to protect a business from a major catastrophe or lawsuit. Typically, umbrella insurance steps in and provides the difference between your underlying general liability coverage and the actual cost of damages resulting from a lawsuit or disaster.

 

Business Interruption Insurance

This type of insurance reimburses you for the loss of income resulting from an insured catastrophic event, such as a fire. The policy covers the profits you would have earned if no interruption had occurred. And it pays for expenses that you continue to incur even though your business is not operating normally, such as debt payments, taxes, and salaries.

 

Key Person Insurance

You’ll need key person life insurance to protect your business in case you, a partner, or other key employee dies. If you operate your business with multiple partners, you should consider using life insurance to fund a buy-sell agreement. Disability insurance is also a must for you and your key people.

 

Errors and Omissions (Professional Liability) Insurance

If you are in the business of giving advice, making educated recommendations, designing solutions, or representing the needs of others, you may want to consider errors and omissions insurance. This type of coverage protects you against claims that something you did on a client’s behalf was incomplete or inadequate, cost your client money, or caused harm in some way.

 

Errors and omission insurance may be appropriate if you run a consulting business, design software or websites, sell real estate or insurance, operate a career placement business, etc.

 

The bottom line is that no business can afford to operate without adequate insurance coverage in this day and age.

 

Whether you have questions about insurance, taxes, or general business best practices, give us a call today. We have the training and experience you need.

Are You Getting Divorced? Here’s what You Need to Know About Your Taxes

Divorce opens up a whole new territory of legal, personal, and financial issues. Here are some things to be aware of on the tax front.

 

Alimony and Child Support

 

Alimony payments are tax deductible; child support payments are not. On the other hand, amounts received as alimony have to be included in income for tax purposes, while child support can be received tax free.

 

Dependency Exemption

 

Typically, the parent who has legal custody of a child has the right to claim the dependency exemption. However, parents can agree otherwise. A custodial parent uses IRS Form 8332 to release the exemption.

 

Tax Credits

 

Generally, the parent who claims the child as a dependent also gets the benefit of child-related tax credits, such as the child tax credit and the credit for higher education expenses.

 

Retirement Plan Benefits

 

Retirement plan benefits received from the retirement plan of a former spouse under a court-issued document called a “qualified domestic relations order” are taxable to the recipient.

 

Personal Residence

 

Gain from the sale of a principal residence is not taxable if certain requirements are met. The tax-free ceiling is $500,000 of gain for a married couple and half that amount for a single person.

 

To learn more about tax rules and regulations and divorce, give us a call today. Our knowledgeable and trained staff is here to help.

 

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

Group-Term Insurance – A Perk to Attract Talent

Employers know that the employees of a business will effectively determine whether the venture will be a success or not. Committed employees who are satisfied with their jobs, and the rewards their jobs bring, are a significant asset of any successful business. That is one of the reasons employers seek out ways to reward employees for their hard work and loyalty.

 

At the same time, of course, employers have to consider the bottom line — and the cost of keeping it healthy. That means staying within a reasonable budget for compensation and benefits. If costs are not kept under control, the overall financial status of the business could be threatened. One particular employee benefit generally meets the necessary requirements and provides advantages for both employees and employers. That benefit? Group-term life insurance.

 

Essentially, group-term life insurance is a program of low-cost renewable term life insurance that covers the lives of a group of individuals, such as the employees of a business. A formula that may be based on age, years of service, compensation or position is used in determining how much insurance coverage is provided. Coverage valued at twice an employee’s salary might be offered, for example. Group-term plans are popular with employees for a number of reasons:

  • Employees receive the insurance coverage at no (or little) cost, depending on whether the plan is contributory.
  • Employees can secure coverage, in most cases, without any physical examination. This can be a substantial benefit for an individual who might otherwise be unable to obtain coverage.
  • The cost of the first $50,000 of life insurance coverage provided to an employee is not included in income for tax purposes. If coverage above that level is provided, the taxable cost to the employee is determined at very reasonable rates.
  • Employees may be permitted to convert their group coverage into individual policies when they leave their employer’s workforce.

 

As for employers, they too find much to appreciate in group-term life insurance plans. Some advantages to consider:

  • A high level of insurance protection for employees can be secured at a reasonable cost, and the insurance premiums paid for the coverage are income-tax deductible by the employer.
  • Employees who are satisfied with their benefits are less likely to leave. That means lower turnover and fewer resources spent locating and training new employees. In addition, having a group-term plan in place may make it easier to attract and retain employees as a business grows.
  • Group-term life insurance programs are relatively easy and economical to administer, further easing the burden for employers.

 

Please give us a call if you would like to learn more about group-term life insurance and how it could benefit your employees and your business. We’d be happy to help.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

Changing Expectations of Dental Care

New research by Lincoln Financial Group has revealed that consumers’ criteria for choosing and staying with a dentist for best smiles in Sudbury go beyond the basics. While the quality of care, office environment and being in-network for insurance are all crucial, other factors are also in high demand. The research found that 40% of Millennials believe a dentist’s website is “very important,” compared to just 14% of Baby Boomers. I recently visited Dr. Delahunty and his team at Canyon Rim Dental Salt Lake, they were amazing and had great customer service.

On the website, consumers want to see a list of accepted insurance providers (75%), schedule or change appointments (73%), and view costs of dental procedures (67%). Furthermore, Rob Tanner, research analyst for NW Calgary clinics offering braces, says it’s important for a dentist’s website to be mobile-optimized,  as 51% of clients surveyed say they would “absolutely” find value in a mobile app from their dentist. Meanwhile, 40% of all consumers want a dental office that will take immediate appointments — and about a third either look for a dentist that offers extended hours on week nights or weekend hours. The survey also revealed that 96% would find it valuable if their dental office could provide guidance or take the time to help them better understand their dental insurance plan. Other notable findings related to employers included: 65% want their employer to provide general information about what’s covered by their dental insurance plan; 54% say they’d like their employer to provide a list of local in-network dentists, and 34% say they would appreciate ratings or rankings of in-network dentists.

Keep Reading on Businesswire

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

The Benefits of Cash Balance Plans for Dentists

Dentistry iQ’s Zachary Kulsrud takes a look at accelerating retirement savings through a cash balance plan – a type of defined benefit plan that allows for more pre-tax retirement savings than 401(k) plans, along with additional benefits.

A growing number of dental practice owners find that retirement planning based on a 401(k) or profit-sharing plan alone is not giving them enough savings for retirement. A petition released on http://www.bpidental.co.uk/ reveals that while the maximum contribution in a 401(k) profit-sharing plan is $59,000 a year, contributions to cash balance plans can approach $250,000 a year for dentists who are near retirement. Meanwhile, Dentistry iQ’s Will Parrish outlines guidance for retirement planning, concluding that “Nothing can compare to a well-orchestrated financial plan that involves your attorney, tax advisor, and experienced financial advisor. Many dentists have all of the parts of a plan, but many are unsure how all those parts work together.

Read More at Dentistry IQ

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).