Tax reform may impact charitable giving

As the tax reform measures were unveiled, members of the charitable community expressed alarm that the new rules could create a disincentive to donate.

With the larger standard income tax deduction ($12,000 for an individual filer and $24,000 for a married couple), fewer people will realize the benefits of itemizing.

Some charities fear that, absent the tax write-off, fewer people will give. Yet others argue a household’s higher net income will be a boon to non-profits. [Read more…]

Evaluating generation-skipping tax transfers

Your current financial plan may include wealth transfers to grandchildren, great-grandchildren or other descendants, and these gifts may be subject to a generation-skipping tax (GST). The GST was created to prevent families from essentially “skipping” a generation’s worth of estate taxes as wealth is passed down.

In 2017, the GST exemption (the amount that can be transferred to grandchildren without incurring a federal GST tax) was $5.45 million adjusted for inflation. Now, under the new tax reform law, the GST exemption is doubled to roughly $11.2 million. In 2026, however, the exemptions revert back to pre-2018 levels.

Doubling the exemption presents an opportunity for families to increase wealth transfer plans without incurring taxes. Individuals may want to take advantage of the increased GST exemption to create GST-exempt trusts. Meanwhile, those with existing trusts subject to the GST tax may want to consider early distributions to take advantage of the higher exemption. [Read more…]

‘Clawback’ concerns linger under new tax law

The new tax reform package increases an individual’s lifetime exemption from roughly $5.5 million to $11.2 million, with an expiration date of December 31, 2025.

For individuals who don’t expect to die in the next eight years, your gift strategy could include protecting assets from future estate taxes while still maintaining adequate resources for your lifetime. You may, for example, choose to max out your lifetime exemption now, while you are still alive, to minimize the tax burden on your heirs when you die.

Let’s assume you are a high-net worth individual with no surviving spouse. If you give your kids $11.2 million now, they receive those funds completely tax free. If you give them $5.5 million now, and they receive another $5.7 million when you die in 2026, your heirs would have to pay a 40% estate tax on that $5.7 million. [Read more…]

Estate planning still essential, despite increased exemptions

The Tax Cuts and Jobs Act (TCJA) reduces individual and corporate tax rates, eliminates a bevy of deductions and makes a host of changes to how Americans can preserve their wealth. Although the act falls short of repealing the death tax, it doubles the amount an individual may transfer tax free, either in his or her lifetime or at death.

Effective January 1, 2018 (and expiring December 31, 2025), the combined gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption amounts double from an inflation-adjusted $5 million to $10 million.

Taking into account inflationary adjustments, the actual amount for these exemptions is expected to be $11.2 million for an individual or $22.4 million for a married couple in 2018. Both exemptions will continue to increase with inflation. Both will also revert back to their current levels at the start of 2026. (Congress could also lower the exemptions before then.) [Read more…]

OSHA delaying employer filing deadline

There’s good news for employers required to electronically file injury and illness data with OSHA: You had until Dec. 1, 2017, to comply.

The rule became effective Jan. 1, 2017, with an initial requirement that employers electronically file the information by July 1, 2017. However, given the agency’s inability as of May 2017 to accept electronic submissions of injury and illness logs, OSHA has now formally proposed extending the filing deadline until Dec. 1. It also appears that OSHA is reconsidering the entire rule, which it may even modify or revoke prior to the proposed Dec. 1 filing date.

Disclosing sponsorships now easier on Instagram

Whether you accept or give sponsorships tied to Instagram posts, Instagram is making an effort to make the disclosure process easier.

The social media network is now testing and considering for widespread use allowing users to tag a brand within posts. If the brand confirms the relationship, the post will then be marked as an ad with a “paid partnership with [brand name]” tag at the top.

The Federal Trade Commission recently called out Instagram in particular in a flurry of letters reiterating that influencers and marketers must clearly disclose their relationships to comply with the agency’s Endorsement Guides. The agency noted that endorsements need to be disclosed near the top of posts so that consumers who view posts in their streams or on mobile devices will see the disclosure without having to click “more.” [Read more…]

What to avoid when signing an office lease

Unforeseen costs can crush a business that opts to sign an office lease without legal counsel. From initial construction costs to later capital improvements, the list of potential hidden costs is long and adds up quickly.

To avoid the possibility of paying several large bills down the line, ask your lawyer to help you negotiate a fair lease up front that covers the following, as necessary: a landlord-performed buildout, a tenant-performed buildout, operating expenses and end-of-lease condition.

Landlord-performed buildout

If the landlord is performing demolition and/or construction at the space you are planning to lease, crucial details need to be ironed out in advance and put in writing, including the nature and scope of the construction, a procedure for preparing and approving plans and specifications, the construction schedule and the approval of contractors. [Read more…]

Must websites accommodate blind users?

Just because the Department of Justice does not yet have new website accessibility rules for places of public accommodation doesn’t mean businesses hosting websites aren’t already at risk.

Blind or visually impaired plaintiffs have been filing federal lawsuits against companies over the accessibility of their websites, although they’re meeting with different results.

A federal judge in Florida recently handed down a verdict in the case of Gil v. Winn-Dixie Stores, Inc., finding that Winn-Dixie had violated Title III of the Americans with Disabilities Act by having a website that could not be used by the blind plaintiff. [Read more…]

Beware pitfalls of cloud contracts

Think it’s just your business’ data being stored in the cloud these days? Think again. Some (or all) of the provisions of your contract with your cloud provider also may be “floating,” and can thus be changed at any time, often without notice to you.

How is this possible? Part of the blame rests with the modern-day trend of simplified contracts that include some brief general terms and conditions hyperlinked to online terms that can change at any time.

Typically, these contracts are presented on an as-is basis, and built-in protections, including service levels, generally provide only basic protection. Businesses then have little to no ability to terminate the agreement, even if key terms — including support obligations, service levels, service descriptions and performance standards — change to their disadvantage. Such key terms can change at any time, generally without notice. [Read more…]

Employer couldn’t force religious worker to use hand scanner

Title VII of the federal Civil Rights Act requires employers to make “reasonable accommodations” for their workers’ religious beliefs. Employers who disregard this, even when the religious beliefs seem bizarre, run the risk of liability, as a mining company in West Virginia recently learned.

In that case, a coal miner refused to use a new biometric scanner that the employer had installed as an identification device. The miner apparently feared that use of the scanner would give him the “Mark of the Beast,” which according to the Book of Revelations would then brand him a follower of the Antichrist. He requested an alternative identification measure as a form of religious accommodation.

The employer denied the request. The employee resigned and sued for religious discrimination under Title VII. A jury found in his favor and a federal appeals court affirmed, rejecting the employer’s argument that the scanner neither left any kind of mark nor legitimately conflicted with the employee’s religious beliefs. [Read more…]

Supervisor can be sued individually for violating the FMLA

The Family and Medical Leave Act entitles employees who’ve been employed for at least 12 months by a company with at least 50 or more employees within a 75-mile radius to take up to three months of unpaid leave during any 12-month period in order to deal with a medical problem, care for a new child or care for a close relative with a health condition. Employers who fail to abide by the FMLA’s requirements or who retaliate against a worker for taking FMLA leave risk serious legal liability.

Further, according to a recent case out of Massachusetts any supervisor or manager who violates the FMLA can be sued individually too.

In that case, employee Elliott Eichenholz was on disability leave from security services giant Brinks, Inc., when his supervisor Gordon Campbell issued him a performance improvement plan (“PIP”) letter containing a bunch of demands he’d have to meet in the next 90 days to keep his job. [Read more…]

Illinois case highlights importance of taking harassment complaints seriously

A recent case from Illinois demonstrates just how critical it is for employers to conduct a legitimate investigation of all complaints of sexual harassment in the workplace.

In that case, Maria Gracia, a female assembly line supervisor at electronics manufacturing services provider Sigma Tron, complained to human resources that her manager had been sending her graphic email photos, calling her late at night, repeatedly asking her on dates and sending her unwanted text messages. She repeatedly turned him down, but one day, after receiving yet another “No,” the manager allegedly suspended her for two days, claiming it was for excessive tardiness.

The HR rep brought Gracia to meet with a company vice president, who, instead of ordering a thorough investigation of the complaints, invited the alleged harasser and retaliator into the meeting to help “sort things out.” After hearing both “sides of the story,” the HR rep and the VP told Gracia to shake hands with the manager and “work together” with him to “solve their disputes.” [Read more…]

Non-disabled worker can bring action under ADA

An employer can land in hot water under the Americans with Disabilities Act (ADA) if it discriminates against a worker based on that worker’s disability. In other words, an employee can’t be fired, denied a promotion or treated negatively because of his or her disability. But did you know that an employer also violates the ADA by mistreating a non-disabled employee whom it thinks is disabled?

Take a recent case out of Virginia involving Joseph Cash, who worked as a service director for a car dealership in the town of Lexington.  He had worked for the dealership for three years when he took another job in 2013. He returned in 2015, but soon after had to take time off to deal with a bleeding ulcer and chronic anemia. While he was out, he and his wife stayed in touch with a supervisor. When Cash got back, he presented a doctor’s note requesting that he be able to work at the dealer’s location in Roanoke, which was closer to his home, or to work half days until he was better.

In response, his supervisor immediately replaced him at the Lexington location and cut his salary by a third. The supervisor also complained about Cash’s absence several years earlier for hip replacement surgery — an absence that had been covered by the Family and Medical Leave Act. [Read more…]

Mishandling terminations can lead to headaches, so consider the human factor

If you’re an employer and you’re reading this, chances are you’ve had to fire an employee for one reason or another. It could have been for cause or for economic reasons. Maybe the worker was simply not a good fit. In most situations, the employee probably left peacefully, although perhaps a bit angry or hurt.

But some workers don’t leave quietly and instead come back at their employers with lawsuits, even if there were legally valid reasons for the firing. In those cases, it’s often how the employer fired the worker and not the job loss itself that triggered the employee’s response. However, a little bit of smart strategy can defuse some of the tension in an emotionally fraught situation and potentially head off a lawsuit that could be costly, distracting and stressful, even if you win.

So how do you keep a legally justifiable termination from backfiring? By handling the termination in a manner that doesn’t come across as callous and disrespectful. [Read more…]

Thanks for making the process easy!

I worked with Shannon processing my late father’s estate. I really appreciated her (and Beliveau’s) professionalism. Shannon is knowledgeable, hard working, organized, technically and mathematically savvy when it came to the estate taxes, and very communicative via email which I really appreciated. I felt confident that I was in good hands. Thank you much!!

~Paul

Tax checklist for business startups

Starting your own business can be equal parts thrilling and intimidating. Complying with regulations and tax requirements definitely falls into the latter category. But, with some professional help, it doesn’t have to be that way. You can get started with this checklist of things you’ll need to consider.

  • Are you a hobby or a business? This may seem basic to some people, but the first thing you’ll have to consider when starting out is whether you really are operating a business, or pursuing a hobby. A hobby can look like a business, but essentially it’s something you do for its own sake that may or may not turn a profit. A true business is generally run for the purpose of making money and has a reasonable expectation of turning a profit. The benefit of operating as a business is that you have more tax tools available to you, such as being able to deduct your losses.
  • Pick your business structure. If you operate as a business, you’ll have to choose whether it will be taxed as a sole proprietorship, partnership, S corporation or C corporation. All entities except C corporations “pass through” their business income onto your personal tax return. The decision gets more complicated if you legally organize your business as a limited liability corporation (LLC). In this case you will need to choose your tax status as either a partnership or an S corporation. Each tax structure has its benefits and downsides – it’s best to discuss what is best for you. [Read more…]

Answers to commonly asked tax questions

With all of the headlines about the changes to tax law, you probably have lots of questions. Here are answers to some of the most common questions taxpayers have this year.

Q. I’m hearing about a lot of changes to 2018 taxes. What should I do?

A. You’re right, there are a lot of changes in 2018 due to the passage of the Tax Cuts and Jobs Act (TCJA), including to the income tax brackets. The simple answer to the question, “What should I do?” is to not make any major changes until you finish filing your 2017 taxes. Once you understand your 2017 tax obligation, you are in a better position to plan for 2018.

However, there are a few things you can start thinking about now. Depending on where you fall in the new income tax brackets, you may want to consider ways to lower your taxable income. This could include increasing your contributions to 401(k) retirement accounts or health savings accounts (HSAs). You’ll also want to make sure your employer has adjusted your federal tax withholding so that you don’t have to wait to receive a large refund (or tax bill) next year. You can review the IRS withholding calculator using your latest pay stub data to make sure the changes are accurate. [Read more…]

Alert: Expired home and education tax breaks revived

Congress passed a federal budget bill in early February that revived dozens of expired tax breaks for the 2017 tax year. They include a deduction for education expenses as well as several tax breaks for homeowners.

If you have not yet filed your 2017 tax return, please be aware these late changes are retroactive to the beginning of 2017. Check out this list of the most useful tax breaks to see if they apply to your situation:

Tuition and fees deduction. If you paid qualified tuition and related higher education expenses, you may be able to deduct as much as $4,000 of those costs. This can be done on a regular return (without itemizing). The deduction is capped at $4,000 for single filers with adjusted gross income (AGI) of $65,000 or less ($130,000 joint) and at $2,000 for single filers with AGI of $80,000 or less ($160,000 joint). [Read more…]

Tax filing reminders

March 1 – Farmers and fishermen who did not make 2017 estimated tax payments must file 2017 tax returns and pay taxes in full.

March 2 – Automatic extension deadline for employers and health care providers to provide Forms 1095-B and 1095-C to individuals.

March 15

  • 2017 calendar-year S corporation income tax returns are due.
  • 2017 partnership returns are due.
  • Deadline for calendar-year corporations to elect S corporation status for 2018.