The massive changes the Tax Cuts and Jobs Act (TCJA) made to income taxes have garnered the most attention. But the new law also made major changes to gift and estate taxes. While the TCJA didn’t repeal these taxes, it did significantly reduce the number of taxpayers who’ll be subject to them, at least for the next several years. Nevertheless, factoring taxes into your estate planning is still important. Exemption increases The TCJA more than doubles the combined gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption, from $5.49 million for 2017 to $11.18 million for 2018. This amount will continue to be annually adjusted for inflation through 2025. Absent further congressional action, however, the exemptions will revert to their 2017 levels (adjusted for inflation) for 2026 and beyond. The rate for all three taxes remains at 40% — only three percentage points higher than the top...[ Read More ]

With the April 17 individual income tax filing deadline behind you (or with your 2017 tax return on the back burner if you filed for an extension), you may be hoping to not think about taxes for the next several months. But for maximum tax savings, now is the time to start tax planning for 2018. It’s especially critical to get an early start this year because the Tax Cuts and Jobs Act (TCJA) has substantially changed the tax environment. Many variables A tremendous number of variables affect your overall tax liability for the year. Looking at these variables early in the year can give you more opportunities to reduce your 2018 tax bill. For example, the timing of income and deductible expenses can affect both the rate you pay and when you pay. By regularly reviewing your year-to-date income, expenses and potential tax, you may be able to time...[ Read More ]

You may have breathed a sigh of relief after filing your 2017 income tax return (or requesting an extension). But if your office is strewn with reams of paper consisting of years’ worth of tax returns, receipts, canceled checks and other financial records (or your computer desktop is filled with a multitude of digital tax-related files), you probably want to get rid of what you can. Follow these retention guidelines as you clean up. General rules Retain records that support items shown on your tax return at least until the statute of limitations runs out — generally three years from the due date of the return or the date you filed, whichever is later. That means you can now potentially throw out records for the 2014 tax year if you filed the return for that year by the regular filing deadline. But some records should be kept longer. For example,...[ Read More ]

Now that small businesses and their owners have filed their 2017 income tax returns (or filed for an extension), it’s a good time to review some of the provisions of the Tax Cuts and Jobs Act (TCJA) that may significantly impact their taxes for 2018 and beyond. Generally, the changes apply to tax years beginning after December 31, 2017, and are permanent, unless otherwise noted. Corporate taxation Replacement of graduated corporate rates ranging from 15% to 35% with a flat corporate rate of 21% Replacement of the flat personal service corporation (PSC) rate of 35% with a flat rate of 21% Repeal of the 20% corporate alternative minimum tax (AMT) Pass-through taxation 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 New 20% qualified business income deduction for owners — through 2025...[ Read More ]

When a company’s deductible expenses exceed its income, generally a net operating loss (NOL) occurs. If when filing your 2017 income tax return you found that your business had an NOL, there is an upside: tax benefits. But beware — the Tax Cuts and Jobs Act (TCJA) makes some significant changes to the tax treatment of NOLs. Pre-TCJA law Under pre-TCJA law, when a business incurs an NOL, the loss can be carried back up to two years, and then any remaining amount can be carried forward up to 20 years. The carryback can generate an immediate tax refund, boosting cash flow. The business can, however, elect instead to carry the entire loss forward. If cash flow is strong, this may be more beneficial, such as if the business’s income increases substantially, pushing it into a higher tax bracket — or if tax rates increase. In both scenarios, the carryforward...[ Read More ]

As you’re likely aware, Congress passed and the president signed into law a new tax bill in December. The technical name of the act is rather long and unwieldy, so it’s commonly referred to by an earlier and simpler title: the Tax Cuts and Jobs Act (TCJA). Naturally, most of the TCJA’s provisions have to do with income taxes. But it also impacts retirement benefits. Loan balances The new law gives a break to plan participants with outstanding loan balances when they leave their employers. Ordinarily, participants with outstanding loans who fail to make timely payments after separation from an employer are deemed to have received a distribution in the amount of that outstanding balance. Under pre-TCJA law, they could, however, roll that amount (assuming they have sufficient funds available) into an IRA without tax penalty if they do so within 60 days. Under the TCJA, beginning in 2018, former...[ Read More ]

Words have power. Do you believe in this expression? If so, it follows that up-to-date, accurate job descriptions form the foundation of every organization’s staffing efforts. Without clear, focused documentation of what each position does, you may struggle to hire and retain good employees. And you could be drastically undermining productivity. Look at everything The solution is relatively simple: Regularly review your job descriptions to ensure they’re current and comprehensive. Check to see whether they list outdated procedures or other outmoded elements, such as software that you’ve since phased out. If you don’t already have written job descriptions for each position, don’t panic. Ask employees in those jobs to document their responsibilities and everyday duties. Each worker’s manager should then verify and, if necessary, help revise the description. Turn information into improvements After you have updated your job descriptions, you can use them to increase organizational efficiency. Weed out the...[ Read More ]

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...[ Read More ]

Many employers use background checks as a regular part of their hiring processes. But “many” does not mean “all.” In fact, recent research conducted by the Society for Human Resource Management indicates smaller businesses tend to skip this important hiring step. Among companies with fewer than 100 employees, fewer than half conduct criminal background checks on job candidates vs. 83% for employers with at least 2,500 employees. If yours is a smaller organization, you may understandably feel pressured to hire good candidates quickly. After all, you don’t have the hiring resources of a larger organization and might really need the help. But, in today’s complex and often litigious working world, background checks remain highly advisable. Here are three good reasons to conduct them: 1. To protect yourself legally. Among the various legal risks you face is being accused of “negligent hiring.” This is a legal concept used in lawsuits against...[ Read More ]

Normally when appreciated business assets such as real estate are sold, tax is owed on the appreciation. But there’s a way to defer this tax: a Section 1031 “like kind” exchange. However, the Tax Cuts and Jobs Act (TCJA) reduces the types of property eligible for this favorable tax treatment. What is a like-kind exchange? Section 1031 of the Internal Revenue Code allows you to defer gains on real or personal property used in a business or held for investment if, instead of selling it, you exchange it solely for property of a “like kind.” Thus, the tax benefit of an exchange is that you defer tax and, thereby, have use of the tax savings until you sell the replacement property. This technique is especially flexible for real estate, because virtually any type of real estate will be considered to be of a like kind, as long as it’s business...[ Read More ]