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On August 8, President Trump signed four executive actions, including a Presidential Memorandum to defer the employee’s portion of Social Security taxes for some people. These actions were taken in an effort to offer more relief due to the COVID-19 pandemic. The action only defers the taxes, which means they’ll have to be paid in the future. However, the action directs the U.S. Treasury Secretary to “explore [...]

Not-for-profits sometimes team up with other entities to boost efficiency, save money and better serve both organizations’ constituencies. This can be a smart move — so long as your accounting staff knows how to report the activities of the two organizations. How you handle reporting depends on the nature of your new relationship. Collaborative arrangements The simplest relationship between nonprofits for accounting purposes may be [...]

Does your business receive large amounts of cash or cash equivalents? You may be required to submit forms to the IRS to report these transactions. Filing requirements Each person engaged in a trade or business who, in the course of operating, receives more than $10,000 in cash in one transaction, or in two or more related transactions, must file Form 8300. Any transactions conducted in [...]

If you’re a partner in a business, you may have come across a situation that gave you pause. In a given year, you may be taxed on more partnership income than was distributed to you from the partnership in which you’re a partner. Why is this? The answer lies in the way partnerships and partners are taxed. Unlike regular corporations, partnerships aren’t subject to income [...]

Does your employer provide you with group term life insurance? If so, and if the coverage is higher than $50,000, this employee benefit may create undesirable income tax consequences for you. “Phantom income” The first $50,000 of group term life insurance coverage that your employer provides is excluded from taxable income and doesn’t add anything to your income tax bill. But the employer-paid cost of [...]

COVID-19 is changing the landscape for many schools this fall. But many children and young adults are going back, even if it’s just for online learning, and some parents will be facing tuition bills. If your child has been awarded a scholarship, that’s cause for celebration! But be aware that there may be tax implications. Scholarships (and fellowships) are generally tax-free for students at elementary, [...]

In response to the COVID-19 crisis, the IRS recently issued Notice 2020-52. It offers sponsors of safe harbor 401(k) plans with temporary relief from certain requirements applicable to midyear reductions or suspensions of contributions. The guidance also clarifies the requirements for midyear contribution reductions (during or after the pandemic) that affect only highly compensated employees (HCEs) participating in such plans. Permissible amendments IRS regulations generally require [...]

When the COVID-19 crisis exploded in March, among the many concerns was the state of the nation’s supply chains. Business owners are no strangers to such worry. It’s long been known that, if too much of a company’s supply chain is concentrated (that is, dependent) on one thing, that business is in danger. The pandemic has only complicated matters. To guard against this risk, you’ve [...]

Last week, the Federal Reserve announced that not-for-profit organizations now may apply for loans under the $600 billion Main Street Lending Program. Previously open only to for-profit businesses with more than 100 employees, the program offers low-interest loans with relatively relaxed repayment terms. If your organization needs funding to keep operating during this difficult period, a Main Street loan may be an option. The Basics Initially, [...]

If you’re planning your estate, or you’ve recently inherited assets, you may be unsure of the “cost” (or “basis”) for tax purposes. Fair market value rules Under the fair market value basis rules (also known as the “step-up and step-down” rules), an heir receives a basis in inherited property equal to its date-of-death value. So, for example, if your grandfather bought ABC Corp. stock in [...]

In Notice 2020-54, the IRS recently provided guidance to employers on Form W-2 reporting of qualified sick leave wages and qualified family leave wages. These are the wages paid to employees under the Families First Coronavirus Response Act. The guidance requires employers to report the amount of qualified sick leave wages and qualified family leave wages paid to those employees. Doing so enables self-employed individuals who also [...]

The COVID-19 pandemic and resulting economic fallout have spurred layoffs and furloughs for many employers. As the months pass, organizations that have retained employees face another dilemma: How should we handle compensation changes? Pay raises have been out of the question for some organizations. In fact, more than 25% of employers surveyed in June by global advisory firm Willis Towers Watson reported reducing salaries rather [...]

A widely circulated article about the COVID-19 pandemic, written by author Tomas Pueyo in March, described efforts to cope with the crisis as “the hammer and the dance.” The hammer was the abrupt shutdown of most businesses and institutions; the dance is the slow reopening of them — figuratively tiptoeing out to see whether day-to-day life can return to some semblance of normality without a [...]

During the COVID-19 pandemic, many small businesses are strapped for cash. They may find it beneficial to barter for goods and services instead of paying cash for them. If your business gets involved in bartering, remember that the fair market value of goods that you receive in bartering is taxable income. And if you exchange services with another business, the transaction results in taxable income [...]