Wednesday, August 31, 2016

What's New with ABLE Accounts?


Remember the Achieving a Better Life Experience (ABLE) Act, which was passed in 2014 and authorized tax-favored savings accounts for people with disabilities? Proposed regulations issued in 2015 provided a blueprint for creating these ABLE accounts and authorized the IRS to develop forms needed for reporting purposes. Another law passed in December 2015 eliminated certain restrictions on the accounts. Now individual states are gearing up for action. So far, 40 states and the District of Columbia have approved legislation for ABLE accounts, including a consortium of nine states that are working together. If your state does not yet offer ABLE accounts (Indiana adopted ABLE accounts on March 21, 2016), you can open one in a state that does.

How the accounts work. An ABLE account resembles a Section 529 college savings plan, but is designed to benefit people with disabilities. The account offers a way to accumulate savings without losing other benefits. In brief, you establish an account for an eligible individual, make a contribution, and choose an investment option. The funds in the account grow on a tax-deferred basis. For 2016, the maximum contribution is $14,000, which may be sheltered from gift tax by the annual gift tax exclusion.

Account distributions for qualified expenses are tax-free. Qualified expenses include payments for education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, and financial management and administrative services.

ABLE accounts are restricted to individuals who experienced the onset of a significant disability before age 26. A family member who meets this requirement and who is already receiving Supplemental Security Income and/or Medicaid is eligible to participate, typically with no impact to those benefits. However, when total assets in the account exceed $100,000, the Supplemental Security Income will be suspended until the balance drops below this threshold.

If you're interested in learning more about ABLE accounts, please contact us.

 

Call us at (219) 769-3616 with your questions, or email them to tlynch@swartz-retson.com.

Reduce Fraud in Your Business With Prevention Strategies


When it comes to fraud, the old adage about a small amount of prevention being worth a large amount of cure is spot on. Investing in fraud prevention methods can be more cost-effective than spending time and money on clean-up after a fraud has been detected. Here are suggestions to help prevent fraud in two key areas.
Payroll. If your company uses payroll software, set up the internal control features to keep master hourly rates, hours worked, and bank direct deposit information safe. Pull timecards periodically to verify that payroll checks are being issued to actual employees, not "ghosts." (Ghost employees are workers who don't actually work for your company, such as former employees who continue to receive paychecks.) Monitor your expense accounts and financial statements. Higher-than-budgeted payroll costs are a potential tip-off to payroll fraud.
Accounts payable. Establish a very clear segregation of duties between the employees who receive goods or authorize services, and the employees who process the payments for those goods and services. Having more than one person complete a task makes fraud more difficult. Take time to get to know your vendors. You want to be sure the companies you're paying are real, not fictitious entities. Monitoring the number of invoices you receive from individual vendors, as well as the average payment amounts for specific vendors, can alert you to suspicious payments.
One more tip: Communication about what is and is not acceptable behavior is also a prevention method. Emphasize to your employees, your vendors, and your clients that unethical behavior and practices are not acceptable, and clearly state the consequences.
Whatever the size of your business, fraud can impact your bottom line. If you have questions about implementing fraud prevention strategies, please contact us. We have suggestions and tips that can help keep your business assets safe.






Monday, August 1, 2016

Real Estate Matters: Know the Tax Rules

Taxes are an important part of the decision to own real estate. Here's a brief overview of tax benefits you can realize while you own real property, as well as when you sell or otherwise dispose of the property.
Current expenses. As a rental property owner, you can deduct current expenses to offset the tax you owe on the rent you receive. For instance, you can write off mortgage interest, property taxes, repairs, and expenses of maintaining your property. The cost of capital improvements is generally added to your basis, providing a benefit when you sell. Be aware that passive activity rules may limit your ability to claim current annual losses.
Depreciation. Depreciation lets you convert the purchase price of your rental property into an expense over the property's expected life. The recovery period for residential buildings is 27½ years, while commercial buildings use a 39-year period. Some qualified improvements may be expensed over a shorter time.
Capital gain. The sale of real estate is generally taxed under capital gain rules. If you sell rental property you've held for longer than one year for more than you paid for it, the gain is taxed at rates up to 15% (20% if you're in the top ordinary income tax bracket). However, you may have to recapture some of the depreciation expense you claimed over the time you owned the property. That can mean part of your gain may be subject to higher tax rates. Losses can offset capital gains from sales of other assets.
Like-kind exchange. Instead of selling your property, you might arrange a like-kind exchange under Section 1031 of the federal income tax code, where you "swap" your property for replacement property. If certain timing and other requirements are met, you can defer tax on part or all of the transaction.
Please contact us to discuss these and other tax-saving opportunities.
Call us at (219) 769-3616 with your questions, or email them to tlynch@swartz-retson.com.

What's Your Personal Net Worth?

Net worth is a familiar term, but you may not calculate or watch it in the same way you track your income. Yet net worth is a valuable measurement tool for overseeing your financial success.
In a nutshell, net worth is total assets less total liabilities, such as debts. Here's an example. Say your assets consist of your home, vehicle, a savings account, and your retirement accounts, all of which total $515,000. Your liabilities, including a mortgage, vehicle and student loans, and credit card debt, total $275,000. Your net worth is $240,000 ($515,000 - $275,000).
What does that tell you? Positive net worth can indicate you have sufficient assets to handle emergencies, though you'll need to drill down a bit more deeply to your liquid net worth to make sure you can successfully navigate unforeseen events. Liquid net worth is the amount of assets you can easily access, such as checking accounts, or quickly turn to cash, such as certificates of deposit.
While a one-time snapshot of your net worth can be useful, such as when you apply for a mortgage or other loan, consistent monitoring gives you the ability to detect trends, both the good (decreasing liabilities) and the worrisome (increasing liabilities). A continual climb upward indicates your financial plan is on track. A steadily decreasing net worth is a signal that you need to make corrections. The goal: Positive growth over time.
You'll also want to review the asset and liability pieces of your net worth separately. In general, you want your assets to steadily increase, and your debt to decrease. Opposite trending should set off warning bells.
Net worth can provide other useful measurements of your financial progress as well, such as work hours required per incremental increase in your net worth, and the time between incurring debt and paying it off.
For more tips and suggestions about calculating, analyzing, and increasing your net worth, contact us.

Call us at (219) 769-3616 with your questions, or email them to tlynch@swartz-retson.com.

New Overtime Rule May Mean More of Your Employees Qualify for Overtime Pay

A new overtime rule takes effect on December 1, 2016, and the Department of Labor estimates that over 4 million workers will become entitled to overtime in the first year of the change. If your employees are included in that number, now is the time to begin preparing. Here's what you need to know.
The background. The Fair Labor Standards Act mandates the federal minimum hourly wage and time-and-one-half pay for hours worked beyond 40 in a week. The Act exempts certain "white collar" workers and "highly compensated employees" from both the minimum hourly wage and the time-and-one-half rules. These workers are collectively classified based on duties and level of earnings. Though job titles do not determine status, typically, executive, administrative, professional, outside sales, or computer workers fit into the white collar category. Highly compensated employees are subject to a more relaxed duties test and a standard annual salary amount.
What's changing. The new rule doubles the annual salary level for the white collar exemption from $23,660 to $47,476, or $913 per week. For highly compensated employees, the total annual compensation level required to claim the exemption rises from $100,000 to $134,004. These salary levels will increase every three years, beginning on January 1, 2020.
How to prepare. Some of your employees may move from exempt to non-exempt status. The only way to be sure is to begin tracking hours and documenting job duties. Once you have determined how the new rule will affect your payroll, you'll have choices to make, including requiring authorization for any overtime, increasing salaries, hiring additional workers, re-assigning duties, and restricting after-hours work-related activities. You may need to update your payroll software as well as your employee handbook and educate your staff about the new requirements.
Contact us if you have questions. We'll be happy to work with your compliance team to assess the impact of the new overtime rule.

Call us at (219) 769-3616 with your questions, or email them to dvanprooyen@swartz-retson.com

Thursday, June 16, 2016

Personal Property Tax Notices


Now that the filing deadline for property tax returns has come and gone, the assessors are working to process the returns.  Businesses that filed an Indiana personal property tax return may receive tax notice 113/PP from their assessor.  A company that receives this notice only has forty-five days from the mailing date to respond or appeal.  Please watch for tax notices from your assessor.  If you receive a notice, please scan or fax a copy to the attention of Stephen A. Sienicki, CPA at ssienicki@swartz-retson.com, FAX (219)736-4876.  Given the deadline to respond, please make sure to forward the notice received as soon as possible.

 

Call us at (219) 769-3616 with your questions, or email them to ssienicki@swartz-retson.com.

 



 

 

Saturday, May 14, 2016

Hiring For the Summer? Know the ACA Rules

If you're an employer, what you have to do to comply with Affordable Care Act (ACA) rules depends on the size of your workforce. When you have 50 or more full-time employees – a total that can include seasonal workers – you have to deal with additional reporting and coverage requirements known as the "employer shared responsibility" provisions. Those provisions mean you need to offer a minimum level of affordable health coverage to full-time employees and their dependents. Otherwise you may have to pay a penalty, if even one of your full-time employees receives a tax credit for buying individual coverage on the government health insurance website.

What's a full-time employee?
 A worker who averages 30 or more hours per week (or 130 hours per month) is considered full-time. But you also need to consider "full-time equivalent" employees. You can determine how many full-time equivalent employees you have by multiplying the number of part-time employees by average hours worked, and dividing the result by the hours required for full-time status. For example, 20 employees working an average of 15 hours per week are equivalent to 10 full-time employees (20 employees times 15 hours divided by 30 hours).

Seasonal employees are generally included in the computation.
 However, there is an exception you'll want to be aware of. Say your workforce exceeds 50 full-time and full-time equivalent employees for 120 days or fewer during a calendar year. If, during that period, the employees in excess of 50 were seasonal workers, you're generally not subject to the employer shared responsibility provisions. What if your workforce exceeds the limit? You may have to offer health insurance to seasonal workers who meet specific weekly work-hour requirements during a look-back "measurement period." The measurement period is a specified number of months during which you track an employee's hours.
ACA requirements apply to nearly every employer in some form, and the rules get complicated quickly.
Please contact us for details.
Call us at (219) 769-3616 with your questions, or email them to dvanprooyen@swartz-retson.com.