Will rising interest rates affect you?

For almost the entire past decade, interest rates held steady at near-zero levels. Then, in mid-December 2015, the Federal Reserve raised rates by one-quarter percentage point. Market watchers and economists expect further rate increases in the coming months. How will you be affected?

Technically speaking, only the federal funds rate was adjusted in December. That’s the short-term rate that credit-worthy banks and credit unions use to lend each other money. But any interest rate revisions can cause a ripple effect throughout the economy. Accordingly, the Federal Reserve’s actions probably will exert at least a moderate influence over financial choices you make at home and in your business in 2016 and beyond. [Read more…]

Update your tangible property expensing policy

In 2013, the IRS issued regulations clarifying when tangible real and personal business property can be expensed. The regulations provided safe harbors that let you deduct certain costs you’d otherwise have to capitalize. For example, using a de minimis safe harbor, you could elect to deduct individual capital expenditures of $500 or less if your business did not have an “applicable financial statement.” (In general, an applicable financial statement is a financial statement based on a certified audit by an accounting firm.) Effective beginning with 2016 taxable years, this safe harbor has increased to $2,500 per invoice or item. In addition, the IRS says it will not contest similar treatment in audits of earlier years.

Plan for changes to social security

The Bipartisan Budget Act of 2015 made two changes to social security benefit strategies. “File and suspend” was a way for married couples to allow the higher earning spouse to claim benefits at full retirement age but suspend the benefits until a later date. Under the Act, this strategy will no longer be available after April 30, 2016. [Read more…]

The myRA: A new simplified Roth IRA is the latest retirement plan

If you haven’t yet begun saving for retirement, a myRA may be a reason to start. “myRA” is an acronym for “my Retirement Account.” myRAs cost nothing to open, have no fees, and let you start saving with any amount that fits your budget. You can open a myRA even if you have other retirement accounts. Your myRA belongs entirely to you and can be moved to any new employer that offers direct deposit capability. [Read more…]

Major tax deadlines for March

  • March 1 – Due date for farmers and fishermen who chose not to make 2015 estimated tax payments to file 2015 tax returns and pay taxes in full to avoid underpayment penalties.
  • March 15 – 2015 calendar-year corporation income tax returns are due.
  • March 15 – Deadline for calendar-year corporations to elect S corporation status for 2016.
  • March 31 – Payers who file electronically must submit 2015 information returns (such as 1099s) to the IRS.
  • March 31 – Employers who file electronically must submit 2015 W-2 copies to the Social Security Administration.

Amazon sued for directing people to competing products

A company called Multi Time Machine makes high-end military-style watches. It refuses to sell them on Amazon. If you search for the company’s watches on Amazon, you’ll get a long list of competing watches.

Is this illegal?

Possibly, according to a federal appeals court in San Francisco, which allowed a lawsuit against Amazon. [Read more…]

Businesses may be in more trouble for data breaches

Two years ago, retailer Neiman Marcus suffered a data breach that resulted in some 350,000 customers having their credit card information compromised. About 9,200 of those customers ended up with fraudulent credit card charges.

That’s bad enough – but Neiman Marcus was then sued in a class action by customers who didn’t have any fraudulent charges on their cards. These customers said Neiman Marcus should nevertheless compensate them for the time and money they had spent on credit monitoring and other efforts to prevent fraud as a result of the hack.

Even though the actual harm to these people might be fairly small, the fact that there were hundreds of thousands of them meant that the size of potential lawsuit was very significant. [Read more…]

‘Comparative advertising’ was close to the line but okay

The Schick razor company recently complained to the National Advertising Division (an ad industry regulatory body administered by the Better Business Bureau) about ads created by the Dollar Shave Club. Schick believed the ads accused name-brand razor companies of engaging in price-gouging and ripping off customers by charging extra for useless features.

One Shave Club ad showed a razor customer at a drugstore receiving a “free gift” of a kick in the groin along with his name-brand razor purchase. Another showed a customer handing over all his worldly possessions to buy razors. [Read more…]

Supreme Court gay marriage ruling affects employee benefits

The U.S. Supreme Court’s recent decision extending same-sex marriage to every state will have a big effect on many employee benefit programs.

Prior to the ruling, most states (and the federal government) recognized same-sex marriage. If all of your employees live in states that previously recognized gay marriages, then no changes are required. But if any of your employees live in previously “non-marriage” states, then the ruling will make a difference.

If some of your workers live in “non-marriage” states and you previously offered benefits to same-sex spouses, then for any employees in those states who have a same-sex spouse, you’ll need to adjust their state tax withholding to the “married” rate, and you may need to adjust their withholding to reflect the fact that spousal health benefits will no longer be subject to state tax. [Read more…]

Social media: New issues for business

Social media is a relatively new field, and the law is just beginning to catch up with all the issues that are being raised for businesses.

Here’s a quick checklist of concerns. It’s by no means exhaustive, which is why a thorough legal review of a company’s social media practices is always a good idea.

Do you look at employees’ (or job applicants’) personal social media accounts? These days, many employers want to keep tabs on their workers’ social media presence. Employers want to get out ahead of problems, such as employees bad-mouthing the company on Twitter or posting confidential information on Facebook. [Read more…]

DNA tests are illegal even to investigate misconduct

A federal law called GINA (the Genetic Information Nondiscrimination Act) prohibits businesses from collecting genetic information, such as DNA samples, from workers. The main purpose of the law is to stop employers from firing workers whose predisposition to certain diseases might drive up the company’s health-care costs.

But a recent case in Georgia shows that the law applies even if a company collects such information for nondiscriminatory reasons, such as to investigate misconduct.

In that case, an unidentified employee at a food distribution company was repeatedly defecating in various spots throughout one of its warehouses. The company suspected the worker was doing this to protest certain company policies. [Read more…]

New mothers have a right to pump breast milk at work

Many employers are still unaware that new mothers have a legal right to express breast milk at work.

Under the federal Fair Labor Standards Act, employees must be allowed reasonable break time to pump breast milk for nursing children. In general, employees are entitled to do this until the child is a year old, in a private place other than a bathroom. Discriminating against a worker because of her need to breastfeed might also be grounds for a sex discrimination lawsuit.

Many states have similar laws, and in some cases these state laws provide more rights to new mothers than the federal law.

Employees are being asked to waive class actions

A “class action” lawsuit is brought on behalf of a large group of people who have a similar complaint. Class actions are not uncommon in employment law, especially for wage-and-hour violations. While a single individual’s unpaid wages might not be large enough to make it worth bringing a lawsuit, a group of employees might be able to share costs and make the effort cost-effective.

Recently, employers have been trying to stop class actions by requiring workers to waive their right to bring one as a condition of employment. Back in 2012, only 16% of large employers required class-action waivers, but by last year that number had skyrocketed to 43%.

Are these waivers legally valid? That’s not entirely clear. [Read more…]

It’s easier to sue for religious discrimination

Two recent court cases have made it easier for employees to bring lawsuits claiming that they were discriminated against because of their religion.

In one case, the U.S. Supreme Court decided that a 17-year-old Muslim in Oklahoma could sue the Abercrombie & Fitch clothing chain for denying her a job because she wore a headscarf for religious reasons.

Samantha Elauf claimed she was rejected for a sales job at a store in Tulsa because her headscarf violated the chain’s dress code, which calls for an “East Coast preppy” image. [Read more…]

Late-night emails might entitle workers to overtime

These days, many employees feel like they’re never really “off the clock.” They’re expected to check e-mails at home, and occasionally to respond to emergency text messages from their boss or co-workers.

But the truth is, many workers in this situation might literally be “on the clock.” If they’re expected to check texts and e-mails at night in addition to working full-time during regular hours, they might be eligible for overtime.

For example, a group of salespeople at T-Mobile stores brought a lawsuit complaining that they had been given BlackBerry devices and were expected to answer e-mails and texts from other staffers and from customers outside of regular business hours. T-Mobile settled their claims for overtime pay. [Read more…]

Common mistakes in employee handbooks

Many employee handbooks are riddled with errors – they contain rules that are illegal, or that are unfair or confusing to employees, or that don’t protect the employer in ways they should.

As a general rule, companies should have their handbooks reviewed by an attorney on an annual basis to make sure they’re appropriate, current, and in compliance with the law. And employees who are concerned about provisions in a handbook shouldn’t hesitate to seek legal advice.

Here’s a look at some common issues, mistakes and problems that arise in employee handbooks: [Read more…]

Husband’s increased pension may end alimony

When Michael and Kathleen Krupinski divorced back in 1990, a court awarded Kathleen one-third of Michael’s eventual pension benefits as a public school teacher, once he retired and began receiving the payments. Michael was also ordered to pay Kathleen $100 a week in alimony.

Michael continued his education after the divorce, and ultimately became a school administrator, which significantly upped his salary and the value of his pension. By the time he retired in 2010, he was making almost three times the salary he’d been making as a teacher at the time of the divorce, and he started receiving much higher pension payments than he otherwise would have.

Because of this, Michael went back to court and asked to have his alimony obligation terminated, in light of the fact that the increase in his wife’s one-third share of his pension more than made up for it. [Read more…]

Shared custody more important than short trip to school

When a Pennsylvania couple divorced, they were given shared custody of their son. Sometime later, the father moved to a new community 11 miles away. As a result, when the son was staying with the father, he had a longer trip to school. (The couple disagreed about how much longer the commute was, but it was arguably up to 40 minutes.)

The mother went to court and argued that she should be given primary custody because the longer commute was disruptive, and prevented the child from developing stable roots and routines. A judge agreed with her. But the father appealed. [Read more…]

College tuition conditioned on family counseling

A father who has an estranged relationship with his teenage son can refuse to contribute to the son’s college expenses unless the son agrees to participate in family counseling, according to a New Jersey court.

The father and mother had divorced years earlier, and the divorce agreement said that both parents would contribute to the children’s college expenses based on their ability to pay at the time the children were ready for college.

After the divorce, the father’s relationship with the oldest child soured. The father wanted to make things better, but the son refused to speak to him. [Read more…]

Be careful with personal injury claims at divorce

If you’ve been injured recently, and have filed (or are thinking of filing) a personal injury lawsuit – but you have also filed (or are thinking of filing) for divorce – it’s extremely important to coordinate the two types of claims.

That’s because the way the personal injury lawsuit is handled could have a big effect on how much of the proceeds you’ll have to share with your spouse in the divorce proceedings.

At a minimum, you should be sure to tell your personal injury lawyer all about the divorce, and tell your divorce lawyer all about the personal injury claim. [Read more…]

Redo your beneficiary designations if you remarry

We’ve often reminded people that it’s important to update all your beneficiary designations after you get divorced – including wills, life insurance policies, bank and brokerage accounts, retirement plans, and so on.

One thing that gets less attention, but is also very important, is to change your beneficiary designations again if you remarry. Failing to do so can create problems if something should happen to you unexpectedly.

For instance, a New Jersey man named Michael Fox bought a $100,000 life insurance policy in 1992 and named his wife as the beneficiary. After he got divorced, he changed the beneficiary designation, naming his sister instead. [Read more…]

Remarrying? Always consider a prenup

People who are remarrying after a death or divorce should almost always strongly consider having a prenuptial agreement.

When prenup agreements first became popular a generation ago, most people thought of them as a way for wealthy people to protect themselves in case they were marrying a gold digger. Today, however, prenups don’t have the same connotation. They’re often used as a straightforward financial and estate planning tool, especially by mature couples who are entering into a second marriage.

The number one reason that people enter into prenups when they begin a second marriage is that they have children from their first marriage, and they want to make sure the children will be well provided for in case they get divorced or in case they die before their new spouse. [Read more…]

New rules may limit foreclosures

In the last few years, Fannie Mae and Freddie Mac have been selling many distressed mortgages to private investors instead of going through the process of foreclosure themselves. A number of people have complained that these investors have treated some homeowners roughly.

Now, new government rules have been issued that are designed to restrain investors and give homeowners more of a chance of staying put. [Read more…]

If you’re thinking of buying a home in another country…

Some well-off people are thinking of buying a vacation or retirement home abroad, now that the dollar is strong and the real estate market has become depressed in many parts of Europe and elsewhere.

If you’re considering such a move, be aware that the rules of real estate can be very different in other parts of the world. [Read more…]

IRS explains mortgage interest deduction for multiple owners

As a general rule, you can deduct home mortgage interest on your federal income taxes, as long as you itemize deductions. This sounds simple enough, but it can get complicated if a home is owned by more than one person. Recently, the IRS provided an explanation of how this works.

According to the IRS, the key question is how much interest each owner actually paid in a given year – not what percentage of the home each owner owns. That means, for example, that if you own a home jointly with a child – so you each own 50% – but you paid 100% of the mortgage interest, you can deduct 100% of the interest payments on your taxes.

Of course, that also means that your child can’t deduct any of the interest on his or her own taxes. [Read more…]

Co-signing a student loan can hurt your credit score

Many parents who co-sign a private student loan for a child don’t realize that it can affect their own credit score if they later apply for a mortgage.

Having parents co-sign loans has become more popular lately, because it can make it easier to get a loan approved or to get a lower interest rate. Some 94% of private student loans were co-signed in the last academic year, up from only 77% six years ago. [Read more…]

Condos lag in housing upturn

The recovery in the housing market has produced higher prices for single-family homes along with all-time record-high apartment rents. But condominiums have been late to the party.

The median sale price for an existing single-family home in the U.S. is now back up to what it was in 2005-2006, before the housing crisis. But the median sale price for an existing condo is still more than $15,000 below its earlier peak. [Read more…]

Do I really need title insurance?

A home is the largest purchase most families ever make. The vast majority of people wouldn’t hesitate to buy homeowner’s insurance to protect their investment against fire, theft, tornadoes, and so on. Title insurance protects people against losing their home in a different way – through discovering that they don’t actually have all the ownership rights they thought they did.

How could such a thing happen? There are a number of ways.

For instance, it might turn out that the person who sold the property didn’t have the complete ability to sell it, because someone else had a legal interest it. An example would be if the seller were divorced, and hadn’t realized that his or her ex-spouse had to sign off on the sale for it to be valid. Even though you bought the house in good faith (and even if the seller acted in good faith), someone else would still have a legal claim to the property. [Read more…]