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Archive for the ‘Retirement Planning’ Category

Byrnes & Bloink’s TaxFacts Intelligence Weekly (Wednesday July 22, 2020)

Posted by William Byrnes on July 22, 2020


Texas A&M University School of Law has launched its online international tax risk management graduate curricula for industry professionals.  Apply now for courses that begin August 23: International Tax Risk Management, Data, and Analytics; International Tax & Tax Treaties (complete list here

Texas A&M University is a public university, ranked in the top 20 universities by the Wall Street Journal / Times Higher Education university rankings, and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.

 

The big news this week is the DOL’s new rules on fiduciary exemptions for rollover transactions. This plus the SEC’s Reg BI is starting to fill in the gaps for fiduciary rules since the DOL’s original Obama-era fiduciary rules were mostly invalidated through litigation. We also see new rules for COVID-related distributions and loans from qualified plans.

DOL Fiduciary Exemption: Application to Rollover Transactions

The new DOL proposed exemption for fiduciary advice specifically applies to rollover advice, assuming the circumstances qualify under the five-part test for determining whether the advisor is an investment advice fiduciary. However, the DOL commentary included with the proposed exemption makes clear that not every rollover triggers investment advice fiduciary status. For more information, visit Tax Facts Online. Read More

New Regs on Tax-Exempt Excise Tax Create Exceptions for Certain Individuals Performing Limited Services

To encourage continued volunteer work and avoid double-taxation, the proposed regulations contain some useful exceptions. An individual will not be subject to the 21 percent excise tax if the limited hours exception or non-exempt funds exception applies. For more information on the new exceptions, visit Tax Facts Online. Read More

Expanded Eligibility for CARES Act Retirement Distribution and Loan Relief
The IRS has expanded the list of individuals who qualify under the expanded distribution and loan rules to include anyone whose pay was reduced due to COVID-19 (regardless of whether hours were reduced or whether the individual was laid off). If a taxpayer was planning to start a new job and the start date was pushed back (or the offer was rescinded entirely) due to COVID-19, that taxpayer also qualifies for relief. Further, if a spouse or member of the plan participant’s household has suffered an enumerated impact, the participant becomes eligible for the expanded retirement account access. For more information, visit Tax Facts Online. Read More

 

Byrnes & Bloink’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Retirement Planning, Taxation | Tagged: | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Special Edition for July 15, 2020 – Tax Filing and Tax Payments Due Today

Posted by William Byrnes on July 15, 2020


Texas A&M University School of Law has launched its online international tax risk management graduate curricula for industry professionals.  Apply now for courses that begin August 23: International Tax Risk Management, Data, and Analytics; International Tax & Tax Treaties (complete list here

Texas A&M University is a public university, ranked in the top 20 universities by the Wall Street Journal / Times Higher Education university rankings, and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

 

Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.

 

Back in April we sent out a special newsletter detailing all of the COVID-related tax changes that we had made to Tax Facts Online content up to that point. Not surprisingly, we have continued to see significant changes since then. This week we’re back with a second special newsletter detailing the changes that we have seen since April. Below are all of the changes made that are related to the Families First Coronavirus Response Act, the CARES Act (including the PPP program), and various regulations from the IRS and DOL. As always, log into Tax Facts Online for the full text of these updates and many others.

Families First Coronavirus Response Act: FFCRA Exemption for Very Small Business Clients

Generally, business owners with fewer than 50 employees can claim an exemption from the paid sick leave and expanded FMLA law if they can show that payment would jeopardize their business as a going concern. DOL FAQ have provided new details, which substantially narrow the availability of the exemption. To qualify, the employee must be taking leave to care for children because of COVID-19 and must satisfy one of three possible criteria to demonstrate that paid leave would jeopardize the business. The three conditions are: (1) providing leave would result in the small business expenses and financial obligations exceeding available business revenues, causing the business to stop operating at minimal capacity, (2) absence of the employee requesting leave would result in a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or (3) there are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee requesting paid leave, and these labor or services are needed for the small business to operate at a minimal capacity. For more information on the FFCRA paid leave requirements, visit Tax Facts Online. Read More

Families First Coronavirus Response Act: DOL FAQ Clarify Concurrent Use of FFCRA Leave

The FFCRA implemented a new paid sick leave law and expanded FMLA leave options for employees impacted by COVID-19. Many employers have independent policies in place that provide employees with leave options, and the DOL regulations raised questions about when the employer can require the employee to use that leave prior to, or concurrently with, FFCRA leave. Employers cannot require employees to use leave concurrently during the first two weeks of paid sick leave for non-childcare related reasons. Employers can, under some circumstances, require use of employee leave concurrently with expanded FMLA leave for childcare reasons. Employers are only eligible for tax credits with respect to leave paid out under the new law. If the employer requires the employee to use otherwise available employer-paid leave, the tax credit is unavailable with respect to that portion of the employee’s pay. For more information, visit Tax Facts Online. Read More

Families First Coronavirus Response Act: Employee Rights after FFCRA Leave

Employers are generally prohibited from retaliating against employees to take paid sick leave or expanded FMLA leave under the FFCRA. However, the law does not protect employees from layoffs or furloughs undertaken for other reasons, such as the general economic downturn. Exceptions exist for key employees and very small employers with fewer than 25 employees. The exception allows employers to refuse returning the employee to work in the same position if the employee took leave for childcare-related reasons, and all four of the following hardship conditions exist: (1) the position no longer exists due to economic or operating conditions that affect employment and due to COVID-19 related reasons during the period of leave; (2) the employer makes reasonable efforts to restore the employee to the same or an equivalent position; (3) the employer makes reasonable efforts to contact the employee if an equivalent position becomes available; and (4) the employer continues to make reasonable efforts to contact the employee for one year beginning either on the date the leave related to COVID-19 reasons concludes, or the date 12 weeks after the leave began, whichever is earlier. For more information on the FFCRA, visit Tax Facts Online. Read More

Families First Coronavirus Response Act: Moving to Reopen, Employers Begin Evaluating FFCRA Leave Provisions

Now that many more employers are beginning to evaluate whether to reopen as governments relax restrictions, those who have been closed for upwards of two months will have to evaluate whether they must provide paid leave under the FFCRA as COVID-19 continues to spread. The FFCRA paid sick leave and expanded FMLA provisions only applied to employers who continued to operate in the wake of the pandemic–employees who were simply laid off or furloughed were required to seek unemployment benefits. Upon first glance, the new paid leave requirements under the FFCRA seem to provide 12 weeks of paid time off for most small business employees. However, the benefit triggers differ depending on whether the employee is claiming (1) 80 hours paid sick leave or (2) expanded relief under the FMLA. For more information on the benefit triggers, visit Tax Facts Online. Read More

Families First Coronavirus Response Act and CARES Act: Qualifying Healthcare Expenses Eligible for Tax Credits Even for Furloughed Employees

The FFCRA and CARES Act each provide tax credits for employers who continue to pay employee wages through 2020. The amount of wages paid also includes qualifying health expenses that the employer pays on the employee’s behalf. Qualifying health expenses are amounts paid by the employer to maintain a group health plan if the amounts would be excluded from employees’ income under IRC Section 106(a). These expenses should generally be prorated between employees and based on the periods of coverage relating to the payment of wages. Health insurance plans, prescription drug plans, dental and vision plans, health FSAs, HRAs and most employee assistance plans should all qualify. Additionally, the IRS has confirmed that employers can claim the tax credits for qualified healthcare expenses, regardless of whether the employee is paid qualified wages during the same timeframe. As a result, employers who have furloughed employees, but continue to cover healthcare expenses, can claim a tax credit for those expenses. For more information, visit Tax Facts Online. Read More

CARES Act: Telehealth Coverage and HDHP/HSA Eligibility

In response to the evolving COVID-19 pandemic, the CARES Act further expands the pre-deductible services high deductible health plans (HDHPs) may offer. HDHPs are now permitted to cover the cost of telehealth services without cost to participants before the HDHP deductible has been satisfied. HDHPs providing telehealth coverage do not jeopardize their status as HDHPs. Plan members similarly retain the right to fund HSAs after taking advantage of cost-free telehealth services. Under normal rules, HDHPs cannot waive costs for anything other than certain preventative services without jeopardizing HDHP status. Remote health services can be provided under a safe harbor rule through December 31, 2021. For more information on the HDHP qualification rules, visit Tax Facts Online. Read More

CARES Act: Bonus Depreciation Fix, Amended Returns for Partnerships

The CARES Act provided retroactive relief to partnerships on multiple fronts, including by fixing the so-called “retail glitch” to allow businesses to take advantage of 100% bonus depreciation on qualified improvement property through 2022. Existing law may have prevented partnerships from filing amended Forms 1065 and Schedules K-1. Instead, partnerships would have been required to file an administrative adjustment request, so that partners would not have received relief until filing returns for the current tax year. Revenue Procedure 2020-23 allows partnerships to file amended returns and issue revised Schedules K-1 for 2018 and 2019 to take advantage of retroactive CARES Act relief (and, absent further guidance, even if they are not taking advantage of CARES Act relief). The relief applies for 2018 and 2019 as long as the original Forms 1065 and Schedules K-1 were filed/issued before April 13, 2020 (the date Rev. Proc. 2020-23 was released). Partnerships can file amended Form 1065 and Schedule K-1 (electronically or by mail), by checking the Form 1065 “amended return” box and writing “FILED PURSUANT TO REV PROC 2020-23” at the top. The same statement must be included in a statement attached to amended Schedules K-1 sent to partners. The amended returns must be filed/furnished to partners by September 30, 2020. For more information, visit Tax Facts Online. Read More

CARES Act: IRS Guidance on Business Interest Elections

The IRS gives businesses substantial flexibility in making and revoking elections related to business interest expense deductions under the CARES Act. A taxpayer may elect under Section 163(j)(10)(A)(iii) not to apply the 50 percent ATI limitation for a 2019 or 2020 taxable year (2020 only for partnerships). A taxpayer permitted to make the election makes the election not to apply the 50 percent ATI limitation by timely filing a federal income tax return or Form 1065 (or amendments) using the 30 percent ATI limitation. No formal statement is required to make the election. The taxpayer can then later revoke that election by filing an amended return or form. Similarly, to use 2019 ATI for 2020, the taxpayer merely files using 2019 ATI (and can then later revoke that election by filing a timely amended return or form). For more information, visit Tax Facts Online. Read More

CARES Act: IRS Allows Corporations to Use Prior Year AMT Credits Retroactively
The 2017 Tax Act generally repealed the corporate AMT, but also permitted corporations to continue claiming a minimum credit for prior year AMT paid. The credit can generally be carried forward to offset corporate tax liability in a later year. The CARES Act eliminates certain limitations that applied to the carryover provision, so that corporations can claim refunds for their unused AMT credits for the first tax year that began in 2018 (i.e., the corporation can take the entire amount of the refundable credit for 2018). The corporation must submit the application for refund before December 31, 2020 and, for convenience, the IRS has institutes a fax procedure for both AMT credit and NOL refund purposes. For more information, visit Tax Facts Online. Read More

CARES Act: Relief for Qualified Plan Loans
The CARES Act relaxed the rules to provide relief for qualified plan participants with existing plan loans. If a participant had an existing plan loan with a repayment obligation falling between March 27 and December 31, 2020, that repayment obligation was extended for one year. Any subsequent repayment obligations are to be adjusted to reflect this extension. For plan participants who are “qualifying individuals,” the plan loan limits were increased to the greater of $100,000 or 100% of the vested balance in the participant’s account. For more information, visit Tax Facts Online. Read More

CARES Act: Expanded Charitable Donation Deduction for 2020
The CARES Act made several changes designed to encourage charitable giving during the COVID-19 outbreak. For the 2020 tax year, the CARES Act amended IRC Section 62(a), allowing taxpayers to reduce adjusted gross income (AGI) by $300 worth of charitable contributions made in 2020 even if they do not itemize. Under normal circumstances, taxpayers are only permitted to deduct cash contributions to charity to the extent those donations do not exceed 60% of AGI (10% for corporations). The CARES Act lifts the 60% AGI limit for 2020. Cash contributions to public charities and certain private foundations in 2020 are not subject to the AGI limit. Individual taxpayers can offset their income for 2020 up to the full amount of their AGI, and additional charitable contributions can be carried over to offset income in a later year (the amounts are not refundable). The corporate AGI limit was raised to 25% (excess contributions also carry over to subsequent tax years). For more information, visit Tax Facts Online. Read More

CARES Act: IRS Releases Initial Q&A on Qualified Plan Loan & Distribution Provisions
The IRS released the first Q&A in what is likely to be a series of guidance on the CARES Act retirement-related provisions. One overarching issue is the IRS confirmation that plan sponsors can rely upon past guidance issued in response to Hurricane Katrina in 2005 and the RMD waiver in 2009 for help implementing the CARES Act provisions. Under initial guidance, individuals are only eligible for COVID-19 related distributions or loans if they themselves are impacted (qualification cannot currently be based on a spouse or dependent’s job loss). The Q&A also clarifies that increased loan limits are currently available between March 27, 2020 and September 22, 2020. Further, the guidance confirms that the loan and distribution relief is optional for plan sponsors–and sponsors can elect to adopt one provision and not another (including the loan repayment option). For more information on the CARES Act loan provisions, visit Tax Facts Online. Read More

CARES Act: Calculating Qualified Plan Loans and the One-Year Look-back Rule

The CARES Act allows plan sponsors to double the qualified plan loan limit for qualified individuals. Plan loans made between March 27, 2020 and September 23, 2020 are limited to the lesser of (1) $100,000 or (2) 100% of the participant’s vested account balance. Despite this, even if the individual is qualified, plan sponsors must remain aware of the one-year look-back rule. IN reality, the $100,000 limit is reduced by the excess of the employee’s highest outstanding plan loan balance during the one-year period ending on the day before the loan is made, over the employee’s outstanding balance of any plan loan on the date the loan is made (this calculation also includes loans from any other plans maintained by the employer or member of a controlled group). For more information on the qualified plan loan rules, visit Tax Facts Online. Read More

CARES Act: IRS Waives Physical Presence Requirement for Spousal Consent to Participant Benefit Elections

IRC Section 417 generally requires spousal consent to a waiver of a qualified joint and survivor annuity (QJSA), which includes the waiver of a QJSA as part of a participant’s request for a plan distribution or a plan loan (the availability of which were expanded under the CARES Act). The spousal consent must generally be witnessed by a plan representative or notary public in person (the physical presence requirement). Notice 2020-42 provides relief in permitting remote electronic notarization executed via live auto-video technology that satisfies any state-level requirements that apply to a notary public. The relief in Notice 2020-42 applies to any participant election that requires a signature to be witnessed in the physical presence of a plan representative or notary in 2020. For more information on spousal consent requirements, visit Tax Facts Online. Read More

CARES Act: IRS Expands RMD Waiver Relief for 2020

The CARES Act waived all RMD requirements for 2020. Despite this, the law was enacted after some taxpayers had already taken their 2020 RMDs early in the year. For those who took RMDs very early in the year, the 60-day rollover period had already expired. In response, the IRS announced that anyone who took a 2020 RMD is eligible to roll the funds back into their account penalty-free. The 60-day rollover period was extended through August 31, 2020, so clients still have only a limited amount of time in which to act. Further, the rollover does not count toward the otherwise applicable “one rollover per 12-month period” rule or the restriction on rollovers for inherited IRAs. For more information on the RMD rules, visit Tax Facts Online. Read More

Payroll Protection Program: Defining “Payroll Costs” for PPP

Taxpayers with fewer than 500 employees are eligible for new “payroll protection loans” administered via the Small Business Administration. In general, the loans may be forgiven (and amounts excluded from income for tax purposes) if used to cover payroll costs, which are defined in the CARES Act to include the sum of (A) payments of any compensation with respect to employees that is (1) salary, wage, commission, or similar compensation, (2) payment of cash tip or equivalent, (3) payment for vacation, parental, family, medical, or sick leave, (4) allowance for dismissal or separation, (5) payment required for the provisions of group health care benefits, including insurance premiums, (6) payment of any retirement benefit or (7) payment of State or local tax assessed on the compensation of employees; and (B) the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation that is not more than $100,000 in one year, as prorated for the covered period. Payroll costs exclude (1) compensation of an individual employee over $100,000 per year, as prorated for the covered period, (2) taxes imposed or withheld under chapters 21, 22, or 24 of the Internal Revenue Code of 1986 during the covered period, (3) any compensation of an employee whose principal place of residence is outside of the United States, (4) qualified sick leave wages for which a credit is allowed under the FFCRA or (5) qualified family leave wages for which a credit is allowed under the FFCRA. For more information, visit Tax Facts Online. Read More

Payroll Protection Program: The Finer Points of PPP Loan Forgiveness

Loan forgiveness offers powerful assistance to those small businesses who were actually able to receive Paycheck Protection Program loan funds. However, loan forgiveness is not without its costs. While amounts forgiven will not be included in income under the usual cancellation of indebtedness rules, business owners may not be entitled to their typical business deductions either. Notice 2020-32 clarifies that otherwise allowable deductions are disallowed if the payment of the expense (1) results in loan forgiveness under the PPP loan program and (2) the income associated with the loan forgiveness is excluded from income under CARES Act Section 1106(i). Although legislation proposed in Congress may change this result, small business clients should pay close attention to the potential future tax impact of loan forgiveness. For more information on implications of loan forgiveness, visit Tax Facts Online. Read More

Payroll Protection Program: Guidance on PPP Eligibility

The Treasury has updated its guidance related to the CARES Act Paycheck Protection Program (PPP) loan forgiveness requirements. The Treasury now notes that most companies with adequate sources of alternative liquidity are likely not eligible for the program. In order to qualify for the loans, PPP borrowers are now required to provide a good faith certification stating that current economic conditions and uncertainty make the loan necessary to support ongoing operations. While Treasury calls out public companies with substantial market value and access to the capital markets specifically, the guidance could also impact businesses who have adequate alternative liquidity to support operations. PPP borrowers who find they cannot make the certification in good faith are permitted to return the funds. For more information on the PPP loan rules, visit Tax Facts Online. Read More

Payroll Protection Program: Increased Flexibility for PPP Recipients

PPP loan forgiveness is determined based on how the small business client spent the loan proceeds. Under the PPPFA, at least 60% of the loan must be used for payroll costs (this 60% threshold was reduced from 75% under the CARES Act). Under the terms of the CARES Act, amounts used to cover eligible expenses could be forgiven if used during the eight-week period following the loan origination date. The PPPFA extended the eight-week period to 24 weeks from the date the lender made the first loan payment to the small business owner. Unless Congress acts again, the funds must all be spent by December 31, 2020 in order to be eligible for forgiveness. The amount forgiven can also be reduced if the employer made certain staffing cuts or cut employee compensation levels. The PPPFA gives employers until December 31, 2020 to bring workers back to work/restore wage levels and continue to qualify for loan forgiveness (extended from prior law, which set the deadline at June 30)). Read More

IRS, DOL Announce Extension of COBRA Election Period

Under normal circumstances, an individual has 60 days from the date when a COBRA qualifying event occurs to elect COBRA coverage (or make a new COBRA election). In light of the COVID-19 outbreak, the IRS and DOL have announced an extension of this 60-day window. The 60-day election window is essentially paused for relevant time periods that include March 1, 2020. The clock is stopped and will not resume until the end of the “outbreak period”. The outbreak period is defined as the window of time beginning March 1, 2020 and ending 60 days after the date that the COVID-19 national emergency is declared ended. The 45-day payment clock and 30-day grace period for late COBRA payments are also paused. For more information on the COBRA election rules, visit Tax Facts Online. Read More

DOL Releases New COBRA Notice in Light of Growing Employment Litigation

The DOL released a revised COBRA general notice and election notice on May 1, 2020, in response to increasing furloughs and layoffs in the wake of COVID-19–and a growing risk of employment litigation. Employers are not required to post the new notices, but may wish to in light of the evolving situation. These new notices add information about how Medicare eligibility impacts COBRA eligibility (highlighting the fact that COBRA coverage is usually secondary to Medicare). Employers who use the model notices are deemed to comply with COBRA notice requirements. For more information on COBRA coverage election requirements and COVID-19, visit Tax Facts Online. Read More

IRS Provides Relief for Cafeteria Plan Participants in Response to COVID-19

Under normal circumstances, cafeteria plans are not permitted to allow participants to make mid-year election changes except in limited situations. Notice 2020-29 permits employees to allow certain mid-year elections made during calendar year 2020 that would otherwise be impermissible, including changes to salary reduction contribution elections. The guidance also allows participants to revoke (or make) an election with respect to health and dependent care FSAs on a prospective basis during 2020 to respond to changing needs during the COVID-19 pandemic. Further, the guidance clarifies that the relief for high deductible health plans (HDHPs) and expenses related to COVID-19 (regarding an exemption for telehealth services) may be applied retroactively to January 1, 2020. For more information on the mid-year election rules for cafeteria plans, visit Tax Facts Online. Read More

IRS Makes Temporary & Permanent Changes to the FSA Grace Period Rules

IRS Notice 2020-33 and Notice 2020-29, released concurrently, provides relief with respect to unused funds in a flexible spending account. Under Notice 2020-29, if an employee has unused amounts remaining in a health FSA or a dependent care assistance program at the end of a grace period (or plan year) ending in 2020, a cafeteria plan may permit employees to apply those unused amounts to pay or reimburse medical care expenses or dependent care expenses incurred through December 31, 2020. Notice 2020-33 makes a change to the carryover rules that apply to health FSAs, so that the amount that can be carried over to the following year will equal 20 percent of the maximum inflation-indexed salary reduction amount under Section 125 (increasing the carryover amount from $500 to $550 for 2020). For more information on the rules governing health FSAs, visit Tax Facts Online. Read More

Treasury Allows Tax Credit for Employers Paying Health Expenses of Furloughed Workers

Clearing up confusion (and revising initial guidance), the Treasury has announced that if an employer continues to pay an employee’s health insurance costs during a furlough period, the employer is entitled to claim a tax credit with respect to those expenses. This is the case even if the employer is not currently paying the employee’s wages. The employee retention credit is generally equal to up to 50% of the employee wages and certain other qualifying expenses. For more information on the employee retention tax credit, visit Tax Facts Online. Read More

Required Business Expense Reimbursement in the Age of COVID-19

Some employers are now permitting employees to work from home–while others are requiring it. In some jurisdictions (California and Illinois, for example) employers are required to reimburse employees for employment expenses. This may create the need for employers to reimburse employees for the cost of maintaining a home office. Further, the FLSA does not permit an employer to require an employee to pay for business expenses if doing so would reduce the employee’s earnings to below the minimum wage. However, simply providing cash reimbursement may generate additional taxable income for the employee. The miscellaneous itemized deduction for expenses incurred in the “trade or business of being an employee” was suspended for 2018-2025. Employers may instead wish to consider a program where the employer leases or purchases the required equipment for the employee’s use. For more information on the impact of reimbursing business expenses, visit Tax Facts Online. Read More

Dependent Care FSAs Provide Flexibility in the Face of a Pandemic

With so many employees working from home–and scrambling to find childcare options as businesses begin to reopen–many employees rethinking contributions to dependent care FSAs. The rules governing changes to dependent care FSA contributions are more flexible than health FSAs. Employees are permitted to make mid-year changes in pre-tax contributions if their circumstances relating to the need for dependent care changes. Employees can reduce their contributions if they are working from home and do not need childcare, or can increase the contributions when they return to work and need to provide for increased childcare costs. Further, employees who have been furloughed and laid off might want to ask whether their plan contains a spend-down feature. These features are optional, but allow former employees to seek reimbursement for dependent care expenses incurred through the end of the tax year (even if their employment has been terminated). Employers have the option of adding a spend-down feature at any time. For more information on dependent care FSAs, visit Tax Facts Online. Read More

IRS Provides Relief for Employee Donations of Unused Sick, Vacation & PTO

The IRS has provided relief so that employees can forgo sick, vacation or personal leave because of the COVID-19 pandemic without adverse tax consequences. Under the guidance, an employer can make cash payments to charitable organizations that provide relief to victims of the COVID-19 pandemic in exchange for sick, vacation or personal leave which their employees forgo. Those amounts will not be treated as compensation and the employees will not be treated as receiving the value of the leave as income. Therefore, taxable income will not be increased, but the employee cannot claim a deduction for the leave donated to their employer. Employers, however, may deduct these cash payments as a business expense or as a charitable contribution deduction if the employer otherwise meets the respective requirements of either section. For more information on the charitable contributions, visit Tax Facts Online. Read More

Home Office Deductions in the Age of Covid-19

With so many taxpayers working from home—some indefinitely—do to Covid-19, many are likely wondering whether they can deduct their home office expenses. In short, traditional W-2 employees cannot deduct their home office expenses regardless of whether they would otherwise qualify for the deduction. The 2017 tax reform legislation eliminated this deduction for 2018-2025. Self-employed taxpayers can deduct expenses associated with maintaining a home office if the office is used regularly and exclusively as the taxpayer’s principal place of business (if the office is within the dwelling unit). A home office deduction is permitted for self-employed taxpayers with separate structures if the office/workspace is used “in connection with” the trade or business. For more information on the home office deduction, visit Tax Facts Online. Read More

 

Byrnes & Bloink’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Retirement Planning, Taxation | Tagged: , , , , , , | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Weekly (Friday June 26, 2020)

Posted by William Byrnes on June 26, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals.

Apply now for fall courses that begin in August: Enterprise Risk Analytics; Information Security Risk Management; Terrorism Risk Management; International Tax Risk Management, Data, and Analytics II; International Tax & Tax Treaties I and II; Securities Regulation; Investment & Portfolio Management; Financial Innovation (and Risk)

Texas A&M University is a public university, ranked in the top 20 universities by the Wall Street Journal / Times Higher Education university rankings, and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.

 

This week the new ERISA E-disclosure safe harbor was finalized, we have some news on GRATs, and some additional COVID-related updates pertaining to PTO donations and the always loved (but often misunderstood!) home office deduction. How goes the home office for you, dear reader?

DOL Finalizes E-Disclosure Safe Harbor

The DOL finalized its e-disclosure safe harbor proposal, allowing electronic distribution of notices and disclosures required by ERISA. Under the safe harbor documents, retirement plans can deliver documents electronically by posting required documents on the plan sponsor’s website and furnishing notice of internet availability to participants via email. The sponsor can also send the documents directly via email to plan participants, whether in an attachment or in the body of the email. For more information on the new e-disclosure safe harbor, visit Tax Facts Online. Read More

9th Circuit Affirms GRAT Included in Decedent’s Estate

The Ninth Circuit recently confirmed that a decedent’s estate included the value of a grantor retained annuity trust because the decedent received annuity payments up until the date of her death. The decedent in this case died before the GRAT terminated, meaning that there was no actual transfer of the trust property. She had created the GRAT structure to transfer interests in a family business to her daughters, receiving a $302,529 annuity payment annually for 15 years. The business generated enough income so that the value of the partnership interest was not decreased by the monthly annuity payments. Under IRC Section 2036(a), because the decedent was still enjoying the economic benefit of the property at death, the entire value was included in her gross estate. The court rejected the argument that the value should be excluded because the statute does not specifically list “annuities” as property that may be pulled into the estate. For more information on the use of GRATs, visit Tax Facts Online. Read More

Home Office Deductions in the Age of Covid-19

With so many taxpayers working from home–some indefinitely–do to Covid-19, many are likely wondering whether they can deduct their home office expenses. In short, traditional W-2 employees cannot deduct their home office expenses regardless of whether they would otherwise qualify for the deduction. The 2017 tax reform legislation eliminated this deduction for 2018-2025. Self-employed taxpayers can deduct expenses associated with maintaining a home office if the office is used regularly and exclusively as the taxpayer’s principal place of business (if the office is within the dwelling unit). A home office deduction is permitted for self-employed taxpayers with separate structures if the office/workspace is used “in connection with” the trade or business. For more information on the home office deduction, visit Tax Facts Online. Read More

IRS Provides Relief for Employee Donations of Unused Sick, Vacation & PTO

The IRS has provided relief so that employees can forgo sick, vacation or personal leave because of the COVID-19 pandemic without adverse tax consequences. Under the guidance, an employer can make cash payments to charitable organizations that provide relief to victims of the COVID-19 pandemic in exchange for sick, vacation or personal leave which their employees forgo. Those amounts will not be treated as compensation and the employees will not be treated as receiving the value of the leave as income. For more information on the charitable contributions, visit Tax Facts Online. Read More

 

Byrnes & Bloink’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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Tax Facts’ COVID Weekly by William Byrnes and Robert Bloink (June 22, 2020)

Posted by William Byrnes on June 23, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals.

Apply now for fall courses that begin in August: Enterprise Risk Analytics; Information Security Risk Management; Terrorism Risk Management; International Tax Risk Management, Data, and Analytics II; International Tax & Tax Treaties I and II; Securities Regulation; Investment & Portfolio Management; Financial Innovation (and Risk)

Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.

Yes, there are new PPP Rules that allow a lot more flexibility in qualifying for forgiveness. But this week we also have a number of new rules on employee benefits and compensation issues, including a Supreme Court decision on a defined benefits case.

Increased Flexibility for PPP Recipients

PPP loan forgiveness is determined based on how the small business client spent the loan proceeds. Under the PPPFA, at least 60 percent of the loan must be used for payroll costs (this 60 percent threshold was reduced from 75 percent under the CARES Act The PPPFA extended the eight-week period to twenty-four weeks from the date the lender made the first loan payment to the small business owner. Unless Congress acts again, the funds must all be spent by December 31, 2020 in order to be eligible for forgiveness. The amount forgiven can also be reduced if the employer made certain staffing cuts or cut employee compensation levels. The PPPFA gives employers until December 31, 2020 to bring workers back to work/restore wage levels and continue to qualify for loan forgiveness (extended from prior law, which set the deadline at June 30)). Read More

U.S. Supreme Court: DB Participants Lack Standing to Sue Fiduciaries When Payments are Unaffected

The U.S. Supreme Court has now ruled that ERISA-governed defined benefit plan participants lack standing to sue plan fiduciaries in situations where the participants’ own payments were not impacted. In this case, the plaintiffs sued alleging mismanagement of plan funds and self-dealing. However, the plaintiffs’ own fixed pension payments continued to be paid (the plan in this case was overfunded). The Court held that because the plaintiffs would not be impacted financially by the outcome of the case, they lacked standing to sue under Article III of the U.S. constitution. For more information on DB plan funding requirements, visit Tax Facts Online. Read More

New Foreign Earned Income Exclusion Rules

The bona fide residence test and physical presence test generally provide specific time requirements that apply to individuals claiming a tax exclusion for foreign-earned income. An otherwise qualified individual may still exclude foreign earned income for the period in which the individual was actually present in the foreign country even if the individual fails to meet the time requirements. For more information, visit Tax Facts Online. Read More

IRS Waives Physical Presence Requirement for Spousal Consent to Participant Benefit Elections

IRC Section 417 generally requires spousal consent to a waiver of a qualified joint and survivor annuity (QJSA), which includes the waiver of a QJSA as part of a participant’s request for a plan distribution or a plan loan (the availability of which were expanded under the CARES Act). The spousal consent must generally be witnessed by a plan representative or a notary public in person (the physical presence requirement). Notice 2020-42 provides relief in permitting remote electronic notarization executed via live auto-video technology that satisfies any state-level requirements that apply to a notary public. For more information on spousal consent requirements, visit Tax Facts Online. Read More

 

Byrnes & Bloink’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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Tax Facts’ COVID Weekly by William Byrnes and Robert Bloink (June 15, 2020)

Posted by William Byrnes on June 17, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals.

Apply now for fall courses that begin in August: Enterprise Risk Analytics; Information Security Risk Management; Terrorism Risk Management; International Tax Risk Management, Data, and Analytics II; International Tax & Tax Treaties I and II; Securities Regulation; Investment & Portfolio Management; Financial Innovation (and Risk)

Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.

This week’s updates are primarily focused on employee benefits issues that have taken a turn during the COVID 19 era. First, dependent care FSAs can play an increasingly important role for employees who are facing dependent care costs that may be drastically different than what they had anticipated when they were considering their benefit elections in late 2019. New rules allow for mid-year changes to those elections. Also, employers who continue to pay for healthcare coverage for furloughed employees may be able to take advantage of certain tax credits. All this and more and your weekly Tax Facts Online updates!

New PPP Guidance

The Treasury has updated its guidance related to the CARES Act Paycheck Protection Program (PPP) loan forgiveness requirements. The Treasury now notes that most companies with adequate sources of alternative liquidity are likely not eligible for the program. In order to qualify for the loans, PPP borrowers are now required to provide a good faith certification stating that current economic conditions and uncertainty make the loan necessary to support ongoing operations. PPP borrowers who find they cannot make the certification in good faith are permitted to return the funds. For more information on the PPP loan rules, visit Tax Facts Online. Read More

Required Business Expense Reimbursement in the Age of COVID-19

Some employers are now permitting employees to work from home–while others are requiring it. In some jurisdictions (California and Illinois, for example) employers are required to reimburse employees for employment expenses. This may create the need for employers to reimburse employees for the cost of maintaining a home office. Further, the FLSA does not permit an employer to require an employee to pay for business expenses if doing so would reduce the employee’s earnings to below the minimum wage. For more information on the impact of reimbursing business expenses, visit Tax Facts Online. Read More

New Proposed Regs on UBTI Calculations for VEBAs and SUBs

The IRS proposed regulations address the treatment of unrelated business taxable income (UBTI) for certain tax-exempt entities, including VEBAs and SUBs. UBTI is income generated from an activity unrelated to the tax-exempt purpose of the entity. For more information, visit Tax Facts Online. Read More

 

Byrnes & Bloink’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

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TaxFacts Covid-19 Weekly by William Byrnes and Robert Bloink (Friday May 22, 2020)

Posted by William Byrnes on May 22, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for fall courses that begin in August: Enterprise Risk Analytics; Information Security Risk Management; Terrorism Risk Management; International Tax Risk Management, Data, and Analytics II; International Tax & Tax Treaties I and II; Securities Regulation; Investment & Portfolio Management; Financial Innovation (and Risk) Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

 Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.
This week brings two updates that may affect employee benefits. The first is that mid-year changes to cafeteria plan elections are permissible. This includes FSA and dependent care accounts, which may be important as both healthcare and childcare expenditures for many people are wildly different than what they had anticipated at the end of 2019. The IRS also made some temporary FSA changes permanent. Finally in some non-COVID updates (yes there is some!), the IRS released proposed rules that change how some administrative expenses incurred by trusts and estates can be deducted.
IRS Provides Relief for Cafeteria Plan Participants in Response to COVID-19

Under normal circumstances, cafeteria plans are not permitted to allow participants to make mid-year election changes except in limited situations. Notice 2020-29 permits employees to allow certain mid-year elections made during calendar year 2020 that would otherwise be impermissible, including changes to salary reduction contribution elections. For more information on the mid-year election rules for cafeteria plans, visit Tax Facts Online. Read More

IRS Makes Temporary & Permanent Changes to the FSA Grace Period Rules

IRS Notice 2020-33 and Notice 2020-29, released concurrently, provides relief with respect to unused funds in a flexible spending account. Under Notice 2020-29, if an employee has unused amounts remaining in a health FSA or a dependent care assistance program at the end of a grace period (or plan year) ending in 2020, a cafeteria plan may permit employees to apply those unused amounts to pay or reimburse medical care expenses or dependent care expenses incurred through December 31, 2020. Notice 2020-33 makes a change to the carryover rules that apply to health FSAs, so that the amount that can be carried over to the following year will equal 20 percent of the maximum inflation-indexed salary reduction amount under Section 125 (increasing the carryover amount from $500 to $550 for 2020). For more information on the rules governing health FSAs, visit Tax Facts Online. Read More

IRS Proposes Rules Allowing Deduction of Administrative Fees for Trusts & Estates

The IRS has released proposed regulations that would permit the deduction for certain administrative fees incurred by trusts and estates (including the S portion of an ESBT). The guidance addresses the treatment of these expenses in light of the suspension of all miscellaneous itemized deductions for 2018-2025 under the 2017 tax reform legislation. For more information on the tax treatment of trusts and estates, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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TaxFacts Covid-19 Intelligence Weekly by William Byrnes and Robert Bloink (May 18, 2020)

Posted by William Byrnes on May 18, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: Legal Risk Management; Intro to Risk Management; FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

 

 Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.

The devil is in the details, but where exactly? This week we are starting to see how the broad changes in the recent spate of COVID-19 legislation will be administered. We have new notices on loan forgiveness procedures (did you get your PPP loan yet?), COBRA and Medicare, and FFCRA paid leave issues.

The Finer Points of PPP Loan Forgiveness

Loan forgiveness offers powerful assistance to those small businesses who were actually able to receive Paycheck Protection Program loan funds. However, loan forgiveness is not without its costs. While amounts forgiven will not be included in income under the usual cancellation of indebtedness rules, business owners may not be entitled to their typical business deductions either. Notice 2020-32 clarifies that otherwise allowable deductions are disallowed if the payment of the expense (1) results in loan forgiveness under the PPP loan program and (2) the income associated with the loan forgiveness is excluded from income under CARES Act Section 1106(i). For more information on implications of loan forgiveness, visit Tax Facts Online. Read More

New Q&A on CARES Act Qualified Plan Loans & Distributions

The IRS released the first Q&A in what is likely to be a series of guidance on the CARES Act retirement-related provisions. One overarching issue is the IRS confirmation that plan sponsors can rely upon past guidance issued in response to Hurricane Katrina in 2005 and the RMD waiver in 2009 for help implementing the CARES Act provisions. Under initial guidance, individuals are only eligible for COVID-19 related distributions or loans if they themselves are impacted (qualification cannot currently be based on a spouse or dependent’s job loss). The Q&A also clarifies that increased loan limits are currently available between March 27, 2020 and September 22, 2020. Further, the guidance confirms that the loan and distribution relief is optional for plan sponsors–and sponsors can elect to adopt one provision and not another (including the loan repayment option). For more information on the CARES Act loan provisions, visit Tax Facts Online. Read More

New COBRA Notice in Light of Growing Employment Litigation

The DOL released a revised COBRA general notice and election notice on May 1, 2020, in response to increasing furloughs and layoffs in the wake of COVID-19–and a growing risk of employment litigation. Employers are not required to post the new notices, but may wish to in light of the evolving situation. These new notices add information about how Medicare eligibility impacts COBRA eligibility (highlighting the fact that COBRA coverage is usually secondary to Medicare). Employers who use the model notices are deemed to comply with COBRA notice requirements. For more information on COBRA coverage election requirements and COVID-19, visit Tax Facts Online. Read More

Moving to Reopen, Employers Begin Evaluating FFCRA Leave Provisions

Now that many more employers are beginning to evaluate whether to reopen as governments relax restrictions, those who have been closed for upwards of two months will have to evaluate whether they must provide paid leave under the FFCRA as COVID-19 continues to spread. The FFCRA paid sick leave and expanded FMLA provisions only applied to employers who continued to operate in the wake of the pandemic–employees who were simply laid off or furloughed were required to seek unemployment benefits. Upon first glance, the new paid leave requirements under the FFCRA seem to provide 12 weeks of paid time off for most small business employees. However, the benefit triggers differ depending on whether the employee is claiming (1) 80 hours paid sick leave or (2) expanded relief under the FMLA. For more information on the benefit triggers, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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Byrnes & Bloink’s Covid-19 TaxFacts Intelligence Weekly for May 7, 2020

Posted by William Byrnes on May 7, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: Legal Risk Management; Intro to Risk Management; FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

 

 Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.

Some interesting updates this week. We already knew that NOLs could be applied retroactively under the CARES Act, but now it seems that corporate AMT credits (remember those?) can be, as well.

Also, the last item on extending the COBRA election period might end up being a big deal. Importantly, the election period (the period that you have to decide whether to take the COBRA benefits) has been extended for an unknown amount of time. There has always been a risk of “moral hazard” with the election period since you can wait to see if you need the coverage before making the decision to commit to paying the premiums. However, that risk seemed low when the election period had a hard cut-off at sixty days. Now the election period is extended to sixty days after the end of the COVID-19 national emergency, which doesn’t seem to be likely to occur anytime soon. It will be interesting to see how group health carriers react to this change.

CARES Act Provides NOL Relief for Struggling Businesses

The CARES Act allows corporations to carry back net operating losses (NOLs) incurred in 2018, 2019, and 2020 for five years (excluding offset to untaxed foreign earnings transition tax). Post-tax reform, these NOLs could only be carried forward. For tax years beginning prior to January 1, 2021, businesses can offset 100% of taxable income with NOL carryovers and carrybacks (the 80% taxable income limitation was lifted). With respect to partnerships and pass-through entities, the CARES Act amended the effective date for the new excess business loss rules created by the 2017 tax reform legislation. The new rules will only apply beginning in 2021 (rather than 2018). Pass-through taxpayers who have filed a return reflecting excess business losses will presumably be entitled to refund by filing an amended return, absent guidance to the contrary. For more information, visit Tax Facts Online. Read More

CARES Act Permits Penalty-Free Payroll Tax Deferral for Employers

The CARES Act allows both employers and independent contractors to defer payment of employer payroll taxes without penalty. Importantly, employers with fewer than 500 employees are entitled to withhold payroll taxes as an advance repayment of the tax credit for paid sick leave and expanded FMLA leave under the FFCRA. Under the CARES Act payroll tax deferral, employers are permitted to defer the employer portion of the payroll tax on wages paid through December 31, 2020 for up to two years. Payroll taxes are generally due in two installments under CARES: 50% by December 31, 2021 and the remaining 50% by December 31, 2022. Economic hardship is presumed, meaning the employer does not have to produce documentation establishing that COVID-19 impacted the business. Payroll tax deferral options apparently apply to all employers, regardless of size. However, employers who have loans forgiven under the CARES Act Payroll Protection Loan program are not eligible for the deferral. For more information, visit Tax Facts Online. Read More

CARES Act Employee Retention Tax Credit

The CARES Act creates a new refundable tax credit designed to help employers who retain employees during the COVID-19 health crisis. The credit is taken against employment taxes and is equal to 50% of the first $10,000 of qualified wages paid to the employee. The credit is available for calendar quarters where either (1) operations were either fully or partially suspended because of a government-issued order relating to COVID-19 or (2) the business’ gross receipts declined by more than 50% when compared to the same calendar quarter in 2019. For more information, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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Byrnes & Bloink’s Covid-19 TaxFacts Weekly of April 24, 2020

Posted by William Byrnes on April 23, 2020


           Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.
More significant information about two of the most important changes to come out of the new legislation related to COVID-19.

The first update is an FAQ from the Department of Labor about the exemption from the expanded FMLA paid leave requirements for staff who are out of work for reasons related to a corona virus infection. The new law only applies to businesses with under 500 employees, but contains a vaguely-worded exemption for very small businesses with less than 50 employees and for whom the paid leave requirement would pose a hardship. While some commentators have thought that the exemption might be loosely interpreted to the point of being nearly automatic, the new FAQs require very small businesses to show particular kinds of challenges before the exemption applies.

We also have an update on the definition of “payroll costs” for small businesses applying for PPP loans. This definition is important because the calculation of those costs determine how large of a loan (which is potentially forgivable if certain requirements are met) the business is eligible for.

FFCRA Exemption for Very Small Business Clients

Generally, business owners with fewer than 50 employees can claim an exemption from the paid sick leave and expanded FMLA law if they can show that payment would jeopardize their business as a going concern. DOL FAQ have provided new details, which substantially narrow the availability of the exemption. For more information on the FFCRA paid leave requirements, visit Tax Facts Online. Read More

Telehealth Coverage and HDHP/HSA Eligibility

In response to the evolving COVID-19 pandemic, the CARES Act further expands the pre-deductible services high deductible health plans (HDHPs) may offer. HDHPs are now permitted to cover the cost of telehealth services without cost to participants before the HDHP deductible has been satisfied. For more information on the HDHP qualification rules, visit Tax Facts Online. Read More

Defining “Payroll Costs” for PPP

Taxpayers with fewer than 500 employees are eligible for new “payroll protection loans” administered via the Small Business Administration. In general, the loans may be forgiven (and amounts excluded from income for tax purposes) if used to cover payroll costs. For more information about how “payroll costs” are defined and calculated, visit Tax Facts Online. Read More

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Byrnes & Bloink’s Covid-19 TaxFacts Special Edition of April 20, 2020

Posted by William Byrnes on April 20, 2020


           Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.
Over the past few weeks Tax Facts has seen a tremendous number of updates that cover the new COVID-19 legislation and related administrative developments. Undoubtedly we will continue to see more of these updates in the weeks and months to come, but we thought now was good time to help our readers catch their breath a little bit by providing a summary of the changes that have been made. This special Tax Facts newsletter is intended to help you navigate through the entirety of the changes that have been made so that you can understand the full breadth of the new tax landscape.

These updates cover (1) the Families First Coronavirus Response Act, (2) the CARES Act, (3) IRS Notices related to the new legislation, and (4) newly released IRS and DOL FAQs that help taxpayers understand how the new rules will be implemented.
Take a look, and as always, check in with Tax Facts the absolute latest in the tax issues affecting insurance, investments, and employee benefits.

Families First Coronavirus Response Act: Paid Sick Leave Benefits for Small Business Employees

The Families First Coronavirus Response Act applies to private employers with fewer than 500 employees (and government employers), and makes several key changes to paid time off laws. The bill: (1) provides eighty hours’ additional paid sick leave for employees (pro-rated for part-time workers) and (2) expands FMLA protections. The additional paid sick leave is capped at $511 per day (total of $5,110) for employees who cannot go to work or telecommute because they (1) are experiencing COVID-19 symptoms and seeking a diagnosis, or (2) are subject to government-mandated quarantine or a recommendation to self-quarantine. The additional paid sick leave is capped at 2/3 of the employee’s pay rate, subject to a maximum of $200 per day or $2,000 total if the employee (1) is caring for or assisting someone subject to quarantine, (2) caring for a child whose school or care provider is unavailable or (3) experiencing “substantially similar conditions” specified by HHS. For more information on the family and medical leave tax credit available for business owners, visit Tax Facts Online. Read More

Families First Coronavirus Response Act: Tax Relief for Small Business Owners

The law contains a tax credit to help small business owners subject to the new paid sick leave and expanded FMLA requirements. The tax credit is computed each quarter, and allows as a credit (1) the amount of qualified paid sick leave wages paid in weeks 1-2, and (2) qualified FMLA wages paid (in the remaining ten weeks) during the quarter. The credit is taken against the employer portion of the Social Security tax. Amounts in excess of the employer Social Security taxes due will be refunded as a credit (in the same manner as though the employer had overpaid Social Security taxes during the quarter). The Act also provides a tax credit for qualified health plan expenses that are allocable to periods when the paid sick leave or family leave wages are paid. For more information on refundable tax credits, visit Tax Facts Online. Read More

CARES Act: RMDs Suspended for 2020, Penalty Waived for Coronavirus Distributions

The CARES Act suspended the required minimum distribution (RMD) rules for 2020–a suspension that applies to all 401(k), 403(b), and certain 457(b) deferred compensation plans maintained by the government, as well as IRAs. The law also contains a provision waiving the 10 percent early distribution penalty that applies to retirement account withdrawals. The relief generally mirrors the relief commonly granted in more localized natural disaster situations. The Act allows employees to take up to $100,000 in distributions from an employer-sponsored retirement plan (401(k), 403(b) or defined benefit plan) or an IRA without becoming subject to the penalty. Unless the participant elects otherwise, inclusion of the distribution in income is spread over three years, beginning with the tax year of distribution. The Act also provides a repayment option, where the participant has the option of repaying the distribution over the three-taxable year period beginning with the tax year of distribution. In this case, the distribution will be treated as an eligible rollover made in a trustee-to-trustee transfer within the sixty-day window. For more information on expanded access to retirement funds, visit Tax Facts Online. Read More

CARES Act: NOL Relief for Struggling Businesses

The CARES Act allows corporations to carry back net operating losses (NOLs) incurred in 2018, 2019, and 2020 for five years (excluding offset to untaxed foreign earnings transition tax). Post-tax reform, these NOLs could only be carried forward. For tax years beginning prior to January 1, 2021, businesses can offset 100% of taxable income with NOL carryovers and carrybacks (the 80 percent taxable income limitation was lifted). With respect to partnerships and pass-through entities, the CARES Act amended the effective date for the new excess business loss rules created by the 2017 tax reform legislation. The new rules will only apply beginning in 2021 (rather than 2018). Pass-through taxpayers who have filed a return reflecting excess business losses will presumably be entitled to refund by filing an amended return, absent guidance to the contrary. For more information, visit Tax Facts Online. Read More

CARES Act: Penalty-Free Payroll Tax Deferral for Employers

The CARES Act allows both employers and independent contractors to defer payment of employer payroll taxes without penalty. Importantly, employers with fewer than 500 employees are entitled to withhold payroll taxes as an advance repayment of the tax credit for paid sick leave and expanded FMLA leave under the FFCRA. Under the CARES Act payroll tax deferral, employers are permitted to defer the employer portion of the payroll tax on wages paid through December 31, 2020 for up to two years. Payroll taxes are generally due in two installments under CARES: 50 percent by December 31, 2021 and the remaining 50 percent by December 31, 2022. Economic hardship is presumed, meaning the employer does not have to produce documentation establishing that COVID-19 impacted the business. Payroll tax deferral options apparently apply to all employers, regardless of size. However, employers who have loans forgiven under the CARES Act Payroll Protection Loan program are not eligible for the deferral. For more information, visit Tax Facts Online. Read More

CARES Act: Employee Retention Tax Credit

The CARES Act creates a new refundable tax credit designed to help employers who retain employees during the COVID-19 health crisis. The credit is taken against employment taxes and is equal to 50 percent of the first $10,000 of qualified wages paid to the employee. The credit is available for calendar quarters where either (1) operations were either fully or partially suspended because of a government-issued order relating to COVID-19 or (2) the business’ gross receipts declined by more than 50 percent when compared to the same calendar quarter in 2019. For more information, visit Tax Facts Online. Read More

IRS Notice 2020-15: HDHPs Can Pay Coronavirus Costs

The IRS announced that high deductible health plans are permitted to cover the costs associated with the coronavirus. HDHPs can cover coronavirus-related testing and equipment needed to treat the virus. Generally, HDHPs are prohibited from covering certain non-specified expenses before the covered individual’s deductible has been met. Certain preventative care expenses are excepted from this rule. HDHPs will not jeopardize their status if they pay coronavirus-related expenses before the insured has met the deductible, and the insured will remain HSA-eligible. The guidance applies only to HSA-eligible HDHPs. For more information on the rules governing HDHPs, visit Tax Facts Online. Read More

IRS Notice 2020-18: 90-Day Extension of the Federal Tax Payment Deadline

In response to the coronavirus pandemic, the IRS has announced that it will extend the tax payment deadline from April 15, 2020 to July 15, 2020. Interest and penalties during this period will also be waived. The April 15 filing deadline was also extended to July 15, although in separate guidance. Individuals and pass-through business entities owing up to $1 million in federal tax are eligible for the relief, as are corporations owing up to $10 million in federal tax. Individuals who do not anticipate being able to file by July 15 should be aware of their option for requesting a six-month filing extension to October 15. The extension is available by filing Form 4868. For more information on federal tax filing requirements, visit Tax Facts Online. Read More

IRS Notice 2020-23: IRS Expands COVID-19 Extensions

Notice 2020-23 provides expanded relief for taxpayers with a filing or payment obligation arising after April 1, 2020 and before July 15, 2020. Specifically, deadlines are extended to July 15, 2020 for actions required with respect to (1) estate and trust income tax payments and return filings, (2) estate and generation-skipping transfer tax payments and return filings on Form 706 and related forms, (3) gift and generation-skipping transfer tax payments and return filings on Form 709 and related forms, (4) estate tax payments of principal or interest due as a result of an election made under IRC sections 6166, 6161, or 6163 and annual recertification requirements under section 6166. Similarly, taxpayers who faced deadlines with respect to Tax Court actions between April 1 and July 15 have their deadlines postponed until July 15. For more information, visit Tax Facts Online. Read More

IRS FAQ: COVID-19 Filing, Payment Extensions

The IRS FAQ clarifies that the filing and payment extensions (from April 15 to July 15) apply regardless of whether the taxpayer is actually sick or quarantined because of COVID-19. For fiscal year taxpayers with 2019 returns due April 15, the deadline is extended to July 15 regardless of whether April 15 is an original or extended filing deadline. Taxpayers facing filing or payment deadlines that are not April 15 must note that their deadlines have not generally been extended. The relief also does not apply to payroll or excise tax payments (deposit dates remain unchanged, but employers may be eligible for the new paid sick leave tax credit, see Tax Facts Q8550). Taxpayers do not have to do anything to take advantage of the extension—they simply file their returns and make required payments by the new July 15 deadline. Taxpayers who filed and schedule a payment for April 15 must, however, take action to reschedule their payment for July 15 if they wish (by contacting the credit or debit card company if the payment was scheduled directly with the card issuer). For more information, visit Tax Facts Online. Read More

DOL FAQ: Counting Employees for COVID-19 Paid Sick Leave & FMLA Expansion Purposes

A new DOL FAQ provides that an employer is subject to the expanded paid sick leave and FMLA rules if the employer has fewer than 500 full-time and part-time employees. Employees on leave and temporary employees should be included, while independent contractors are not included in the count. Each corporation is usually a single employer. When a corporation has an ownership interest in another corporation, the two are separate employers unless they are joint employers for Fair Labor Standards Act purposes. Joint employer status is based on a facts and circumstances analysis, and is generally the case when (1) one employer employs the employee, but another benefits from the work or (2) one employer employs an employee for one set of hours in a workweek, and another employer employs the same employee for a separate set of hours in the same workweek. For more information on the details provided by current DOL guidance, visit Tax Facts Online. Read More

DOL FAQ: Calculating Sick Pay for Part-Time and Variable Hour Workers Under the Families First Coronavirus Response Act

With respect to the FMLA extension, the rate of pay for part-time employees is based upon the number of hours they would normally be scheduled to work. For employees with variable schedules, pay is based upon a number equal to the average number of hours that the employee was scheduled per day over the 6-month period ending on the date on which the employee takes such leave, including hours for which the employee took leave of any type or (2) if the employee did not work over such period, the reasonable expectation of the employee at the time of hiring of the average number of hours per day that the employee would normally be scheduled to work. As of now, the law provides that leave may not be carried over into 2021. For more information on the law’s requirements, visit Tax Facts Online. Read More

2020’s Weekly Updated Tax Facts Offers a Complete Web, App-Based, and Print Experience for Financial Advisors and Tax Professionals

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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Byrnes & Bloink’s Covid-19 TaxFacts Weekly for April 17, 2020

Posted by William Byrnes on April 16, 2020


online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: Wealth Management; Legal Risk Management; Intro to Risk Management; FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

           Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.
More on the COVID-19 legislation and related administrative guidance from the DOL. This week we have updates on business interest deductions, student loan payment info, and DOL guidance on the PTO that was mandated by the new legislation. Are you keeping up?

 

CARES Act: Business Interest Deduction Relief

The CARES Act increases the 30% of adjusted taxable income (ATI) limit on the business interest deduction (as imposed under the 2017 tax reform law) to 50% for corporations in 2019 and 2020. All entities (corporations and pass-throughs) can elect to use 2019 ATI instead of 2020 ATI in determining the 2020 business interest expense deduction, which could increase the business interest deduction for businesses who are likely to see reduced income levels in 2020. For more information, visit Tax Facts Online. Read More

CARES Act Offers Tax-Preferred Student Loan Repayment Assistance Option

The CARES Act includes a provision that gives employers a way to offer tax-preferred student loan repayment assistance to employees. The Act changes the definition of “educational assistance” in IRC Section 127 to also include employer payments to employees of student loan principal or interest. The payments must currently be made before January 1, 2021. The maximum benefit permitted is a $5,250 payment in 2020 (tax-free). For more information on the requirements for establishing a tax-preferred education assistance program, visit Tax Facts Online. Read More

DOL Guidance on Notice Requirements Related to Expanded COVID-19 Paid Time Off

The DOL has released a notice that all employers must conspicuously post to give employees information about federal relief efforts related to COVID-19. The DOL FAQ notes that when employees are working remotely, employers can email or mail the relevant notices. The notice must be provided to all current employees, but only must be provided in English absent future guidance (a Spanish language notice is available on the DOL website). For more information on the COVID-19 relief efforts, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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SBA Information on How Much Money, To Whom, to Which States

Posted by William Byrnes on April 14, 2020


Byrnes and Bloink analyze the SBA loans, Tax Credit, and Retirement Planning Impact for Small Business because of Covid-19 economic stimulus (Families First, CARES Acts, IRS Notices) on Thursday, April 16th (Register now webinar)

Texas A&M University School of Law has launched a Covid-19 expert response team.  Listen to Professor Neal Newman and William discussing the Covid-19 SBA forgiveness loans, deferral on paying the employer’s Social Security tax, and the Employee Retention Tax Credit (YouTube). Find the response team members from all disciplines here: Download Texas A&M Coronavirus_Experts

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Retirement Planning, Taxation, Uncategorized | Tagged: , , | Leave a Comment »

Byrnes & Bloink’s Covid-19 TaxFacts Intelligence Weekly for April 10, 2020

Posted by William Byrnes on April 10, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: Legal Risk Management; Intro to Risk Management; FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

 

           Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.
Today we have three big updates from the newly-passed CARES Act. The first allows NOLs for tax years 2018 through 2020 to be carried back five years. This give business who had NOLs and were waiting to carry them forward to future tax years to apply them to past years, potentially resulting in additional tax refunds. The other two updates relate to deferrals and tax credits for payroll taxes in 2020.
CARES Act Provides NOL Relief for Struggling Businesses

The CARES Act allows corporations to carry back net operating losses (NOLs) incurred in 2018, 2019, and 2020 for five years (excluding offset to untaxed foreign earnings transition tax). Post-tax reform, these NOLs could only be carried forward. For tax years beginning prior to January 1, 2021, businesses can offset 100% of taxable income with NOL carryovers and carrybacks (the 80% taxable income limitation was lifted). With respect to partnerships and pass-through entities, the CARES Act amended the effective date for the new excess business loss rules created by the 2017 tax reform legislation. The new rules will only apply beginning in 2021 (rather than 2018). Pass-through taxpayers who have filed a return reflecting excess business losses will presumably be entitled to refund by filing an amended return, absent guidance to the contrary. For more information, visit Tax Facts Online. Read More

CARES Act Permits Penalty-Free Payroll Tax Deferral for Employers

The CARES Act allows both employers and independent contractors to defer payment of employer payroll taxes without penalty. Importantly, employers with fewer than 500 employees are entitled to withhold payroll taxes as an advance repayment of the tax credit for paid sick leave and expanded FMLA leave under the FFCRA. Under the CARES Act payroll tax deferral, employers are permitted to defer the employer portion of the payroll tax on wages paid through December 31, 2020 for up to two years. Payroll taxes are generally due in two installments under CARES: 50% by December 31, 2021 and the remaining 50% by December 31, 2022. Economic hardship is presumed, meaning the employer does not have to produce documentation establishing that COVID-19 impacted the business. Payroll tax deferral options apparently apply to all employers, regardless of size. However, employers who have loans forgiven under the CARES Act Payroll Protection Loan program are not eligible for the deferral. For more information, visit Tax Facts Online. Read More

CARES Act Employee Retention Tax Credit

The CARES Act creates a new refundable tax credit designed to help employers who retain employees during the COVID-19 health crisis. The credit is taken against employment taxes and is equal to 50% of the first $10,000 of qualified wages paid to the employee. The credit is available for calendar quarters where either (1) operations were either fully or partially suspended because of a government-issued order relating to COVID-19 or (2) the business’ gross receipts declined by more than 50% when compared to the same calendar quarter in 2019. For more information, visit Tax Facts Online. Read More

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Byrnes & Bloink’s Covid-19 TaxFacts Intelligence Weekly for April 3, 2020

Posted by William Byrnes on April 3, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: Legal Risk Management; Intro to Risk Management; FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

                    Prof. William Byrnes
          Robert Bloink, J.D., LL.M.
Lots of CVOID-19 legislation in the updates this week. The IRS and DOL continue to release new guidance–and update existing guidance–at an unprecedented and fast pace. For the time being, clients and advisors alike should check the actual text of the guidance before taking concrete action to make sure they are operating under the most up-to-date rules.
IRS Releases FAQ on COVID-19 Filing, Payment Extensions

The IRS FAQ clarifies that the filing and payment extensions (from April 15 to July 15) apply regardless of whether the taxpayer is actually sick or quarantined because of COVID-19. For fiscal year taxpayers with 2019 returns due April 15, the deadline is extended to July 15 regardless of whether April 15 is an original or extended filing deadline. Taxpayers facing filing or payment deadlines that are not April 15 must note that their deadlines have not generally been extended. The relief also does not apply to payroll or excise tax payments (deposit dates remain unchanged, but employers may be eligible for the new paid sick leave tax credit, see Tax Facts Q8550). Taxpayers do not have to do anything to take advantage of the extension–they simply file their returns and make required payments by the new July 15 deadline. Taxpayers who filed and schedule a payment for April 15 must, however, take action to reschedule their payment for July 15 if they wish (by contacting the credit or debit card company if the payment was scheduled directly with the card issuer). For more information, visit Tax Facts Online. Read More

Counting Employees for COVID-19 Paid Sick Leave & FMLA Expansion Purposes

DOL FAQ provides that an employer is subject to the expanded paid sick leave and FMLA rules if the employer has fewer than 500 full-time and part-time employees. Employees on leave and temporary employees should be included, while independent contractors are not included in the count. Each corporation is usually a single employer. When a corporation has an ownership interest in another corporation, the two are separate employers unless they are joint employers for Fair Labor Standards Act purposes. Joint employer status is based on a facts and circumstances analysis, and is generally the case when (1) one employer employs the employee, but another benefits from the work or (2) one employer employs an employee for one set of hours in a workweek, and another employer employs the same employee for a separate set of hours in the same workweek. For more information on the details provided by current DOL guidance, visit Tax Facts Online. Read More

Calculating Sick Pay for Part-Time and Variable Hour Workers Under the Families First Coronavirus Response Act

With respect to the FMLA extension, the rate of pay for part-time employees is based upon the number of hours they would normally be scheduled to work. For employees with variable schedules, pay is based upon a number equal to the average number of hours that the employee was scheduled per day over the 6-month period ending on the date on which the employee takes such leave, including hours for which the employee took leave of any type or (2) if the employee did not work over such period, the reasonable expectation of the employee at the time of hiring of the average number of hours per day that the employee would normally be scheduled to work. As of now, the law provides that leave may not be carried over into 2021. For more information on the law’s requirements, visit Tax Facts Online. Read More

RMDs Suspended for 2020, Penalty Waived for Coronavirus Distributions

The CARES Act suspended the required minimum distribution (RMD) rules for 2020–a suspension that applies to all 401(k), 403(b), and certain 457(b) deferred compensation plans maintained by the government, as well as IRAs. The law also contains a provision waiving the 10% early distribution penalty that applies to retirement account withdrawals. The relief generally mirrors the relief commonly granted in more localized natural disaster situations. The Act allows employees to take up to $100,000 in distributions from an employer-sponsored retirement plan (401(k), 403(b) or defined benefit plan) or an IRA without becoming subject to the penalty. Unless the participant elects otherwise, inclusion of the distribution in income is spread over three years, beginning with the tax year of distribution. The Act also provides a repayment option, where the participant has the option of repaying the distribution over the three-taxable year period beginning with the tax year of distribution. In this case, the distribution will be treated as an eligible rollover made in a trustee-to-trustee transfer within the 60-day window. For more information on expanded access to retirement funds, visit Tax Facts Online. Read More

WEBINAR

Small Business Incentives Under the CARES Act:  Will it Help My Business?

Tuesday, April 7, 2020, 12:00 noon – 1:00 p.m. Central

Learn how the CARES Act affects your business.

Texas A&M Law faculty experts share practical, fact-based information regarding how the CARES Act is affecting those of us in Texas in this free webinar.

 

  • Access to and eligibility for loans for small businesses
  • Implications for payroll tax payments and employee tax credits

Presenters:

Posted in Pensions, Reporting, Retirement Planning, Tax Policy, Wealth Management | Tagged: , | Leave a Comment »

Byrnes & Bloink’s Covid-19 TaxFacts Intelligence Weekly for March 26, 2020

Posted by William Byrnes on March 26, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for Summer, call or fill in the form https://law.tamu.edu/distance-education/

            William H. Byrnes, J.D.
        Robert Bloink, J.D., LL.M.
Today we are seeing our first concrete responses to the COVID-19 virus in the tax field. First, the IRS has now formally extended the income tax filing deadline for tax year 2019 to July 15. Because this is an extension of the actual filing deadline (not just an extension of time to pay owed taxes) it also pushes a number of related deadlines (e.g. for qualified plan contributions) back to July. President Trump also signed the Families First Coronavirus Response Act, which creates a paid sick leave program and related tax credits for small businesses.

 

Avoid Confusion Over IRS 90-Day Extension of the Federal Tax Payment Deadline

In response to the coronavirus pandemic, the IRS has announced that it will extend the tax payment deadline from April 15, 2020 to July 15, 2020. Interest and penalties during this period will also be waived. The April 15 filing deadline was also extended to July 15, although in separate guidance. Individuals and pass-through business entities owing up to $1 million in federal tax are eligible for the relief, as are corporations owing up to $10 million in federal tax. Individuals who do not anticipate being able to file by July 15 should be aware of their option for requesting a six-month filing extension to October 15. The extension is available by filing Form 4868. For more information on federal tax filing requirements, visit Tax Facts Online. Read More

Coronavirus Act Creates Paid Sick Leave Benefits for Small Business Employees

The Families First Coronavirus Response Act applies to private employers with fewer than 500 employees (and government employers), and makes several key changes to paid time off laws. The bill: (1) provides 80 hours’ additional paid sick leave for employees (pro-rated for part-time workers) and (2) expands FMLA protections. The additional paid sick leave is capped at $511 per day (total of $5,110) for employees who cannot go to work or telecommute because they (1) are experiencing COVID-19 symptoms and seeking a diagnosis, or (2) are subject to government-mandated quarantine or a recommendation to self-quarantine. The additional paid sick leave is capped at 2/3 of the employee’s pay rate, subject to a maximum of $200 per day or $2,000 total if the employee (1) is caring for or assisting someone subject to quarantine, (2) caring for a child whose school or care provider is unavailable or (3) experiencing “substantially similar conditions” specified by HHS. For more information on the family and medical leave tax credit available for business owners, visit Tax Facts Online. Read More

Coronavirus Response Act: Tax Relief for Small Business Owners

The law contains a tax credit to help small business owners subject to the new paid sick leave and expanded FMLA requirements. The tax credit is computed each quarter, and allows as a credit (1) the amount of qualified paid sick leave wages paid in weeks 1-2, and (2) qualified FMLA wages paid (in the remaining 10 weeks) during the quarter. The credit is taken against the employer portion of the Social Security tax. Amounts in excess of the employer Social Security taxes due will be refunded as a credit (in the same manner as though the employer had overpaid Social Security taxes during the quarter). The Act also provides a tax credit for qualified health plan expenses that are allocable to periods when the paid sick leave or family leave wages are paid. For more information on refundable tax credits, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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Byrnes & Bloink’s TaxFacts Intelligence Weekly for March 19, 2020

Posted by William Byrnes on March 20, 2020


2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

Editor’s Note: New rulings from the IRS help clarify that COVID-19 expenses can be paid by HDHPs (before the deductible has been met) and FSAs can pay for genetic testing when the information is intended to be provided to a medical professional for treatment purposes. Note that the decision on genetic testing comes in the form of a PLR that addresses some rather unique facts, so it may not be very broadly applicable. We also have a new (and regrettably timely) ruling on worthless securities.
IRS Announces HDHPs Can Pay Coronavirus Costs

The IRS announced that high deductible health plans are permitted to cover the costs associated with the coronavirus. HDHPs can cover coronavirus-related testing and equipment needed to treat the virus. Generally, HDHPs are prohibited from covering certain non-specified expenses before the covered individual’s deductible has been met. Certain preventative care expenses are excepted from this rule. HDHPs will not jeopardize their status if they pay coronavirus-related expenses before the insured has met the deductible, and the insured will remain HSA-eligible. The guidance applies only to HSA-eligible HDHPs. For more information on the rules governing HDHPs, visit Tax Facts Online. Read More

Tax Court Rules on Deduction

The Tax Court held that a worthless securities deduction may be permitted even if the entity that issued the securities still held some value. In a complex case involving a number of rounds of financing over several years, the court found it was reasonable to believe that a junior interest may be worthless if there are not funds to pay currently, or anticipated in the future, the senior interests. For more information on the worthless securities deduction, visit Tax Facts Online. Read More

IRS Finds Health FSA Can Reimburse a Portion of Ancestry Genetic Testing

In a private letter ruling (applicable only to the taxpayer requesting the ruling), the IRS found that a portion of the ancestry genetic test could be reimbursed by the health FSA. In the redacted PLR, the IRS discussed whether the genetic testing service could be classified as medical care. The taxpayer’s goal was to provide genetic information to their healthcare provider, but it was impossible to purchase the genetic information without also purchasing the ancestry services. The IRS found that portions of the testing may be considered medical care, although ancestry reports could not be classified as reimbursable medical care. The IRS directed the taxpayer to use a “reasonable method” to allocate between medical and non-medical services. For more information on health FSAs, visit Tax Facts Online. Read More

Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for Summer, call or fill in the form https://law.tamu.edu/distance-education/

 

Posted in Retirement Planning, Taxation | Tagged: , | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (March 16, 2020)

Posted by William Byrnes on March 16, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for Summer, call or fill in the form https://law.tamu.edu/distance-education/

Editor’s Note: Reconciliation abounds! You need to reconcile your advance premium tax credit payments, the Supreme Court needs to reconcile the ACA without the individual mandate, and employers need to reconcile employee withholdings with the new regs.
Do you (or your clients) receive advance premium tax credit payments? If you haven’t squared them away with 2019 income levels that might delay the return. Also, with new withholding regs it’s a good idea for employers to take a second look at employee allowances.
Finally, the Supreme Court will (again) look at the constitutionality of the ACA. Recall that the last time this happened constitutionality hinged on Congress’ ability to tax, with Chief justice Roberts noting that the Aca was clearly tax legislation since the individual mandate penalty was implemented through the tax code. Now that the individual mandate has been repealed, how will the ACA fare under additional scrutiny? Tune in next year to find out!
And wash your hands!
Tax Season Tip: Failure to Reconcile Advance Premium Tax Credit Payments May Delay Returns

The IRS has released guidance reminding taxpayers who received advance payments of their premium tax credit throughout the year of their obligation to reconcile those payments with respect to their actual household income levels for 2019. Taxpayers have the option of choosing to have premium tax credits applied directly to their monthly insurance premiums. For more information on the premium tax credit, visit Tax Facts Online. Read More

Supreme Court to Once Again Consider ACA Viability

The U.S. Supreme Court has agreed to hear arguments and rule on the continued constitutionality of the Affordable Care Act. The Court may decide whether the remainder of the ACA is constitutional absent the individual mandate. Arguments in the case are set to be heard in October, after the election, and a decision is unlikely before 2021. For more information on the individual mandate, visit Tax Facts Online. Read More
Determining the Employer’s Obligations Under the New Proposed Withholding Regulations

The regulations are clear that the employer is not required to ascertain whether the withholding allowance claimed by the employee is greater than those to which the employee is actually entitled. However, the IRS (or published guidance) may direct an employer to submit employees’ withholding certificates (or the certificates relating to groups of employees) to the IRS. Further, the IRS may notify the employer that an employee is not entitled to claim more than a certain withholding allowance. For more information on the new withholding regulations, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Pensions, Retirement Planning, Taxation | Tagged: , | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (March 5, 2020)

Posted by William Byrnes on March 5, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for Summer, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/

Editor’s Note: Litigation on breaches of fiduciary duties in qualified plans has increased dramatically in the past few years, and this week sees an interesting decision from the Supreme Court reducing the statute of limitations where the employee has actual knowledge of the breach. In contrast, the IRS indicates that there is no statute of limitations for employer ACA violations. For more on these topics and many others, log in to Tax Facts for the latest.
U.S. Supreme Court Rules on Statute of Limitations for Fiduciary Breach

The U.S. Supreme Court, in the widely watched Intel case, agreed with former employees that an employer cannot shorten the time period over which plan participants can sue by simply posting relevant information online or sending information in the mail. In most cases, plan participants have six years to bring a lawsuit for fiduciary breach. However, that window is shortened to three years from the date the participant had “actual knowledge” of the fiduciary violation. For more information on investment diversification requirements for 401(k)s, visit Tax Facts Online. Read More

IRS Releases Regs on Post-Reform Deduction for Business Meals and Entertainment

The IRS released regulations governing the post-tax reform treatment of the deduction for business meals and entertainment expenses. The regulations generally mirror guidance release in 2018 and 2019 on the deduction. As such, taxpayers may continue to deduct 50 percent of their business-related food and beverage expenses that are not lavish or extravagant. For more information on the post-reform deduction, visit Tax Facts Online. Read More

IRS: No Statute of Limitations on ACA Penalties for Large Employers

In usual scenarios, when a taxpayer files a return reporting certain information to the IRS, that filing triggers the start of a limitations period after which the IRS can no longer challenge the information in that return (generally, three years). However, the IRS has recently clarified that this rule does not apply with respect to ACA penalty taxes owed by applicable large employers—because there is no actual return that they file in order to report those taxes. This is the case despite the fact that ALEs have certain reporting obligations via annual Forms 1094-C and 1095-C. For more information on how penalties are assessed, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Pensions, Retirement Planning, Taxation, Wealth Management | Tagged: | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (Jan 31, 2020)

Posted by William Byrnes on January 31, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin late May  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for Summer, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/

SECURE Act and Extenders Bill

As a part of the year-end budget package, Congress passed the long-awaited SECURE Act and also addressed the recently neglected extenders provisions. The SECURE Act contains a number of provisions that will impact nearly every American. Some of the highlights include:

·  Pushing the age when required minimum distributions (RMDs) from retirement accounts must begin from 70 1/2 to 72.
·  Permitting contributions to traditional retirement accounts at any age (previously, taxpayers were not permitted to contribute after age 71).
·  Limiting the value of inherited IRAs, so that most accounts inherited by non-spouse beneficiaries must now be distributed within 10 years (rather than over the lifetime of the beneficiary).
·  Increasing the retirement plan start-up credit for small businesses who offer a retirement savings option (to $5,000 per year or $5,500 if auto-enrollment provisions are included).
·  Expanding multiple employer plan (MEP) options so that unrelated employers can join together to offer retirement savings options to employees.
·  Requiring plans to provide annual lifetime income estimates to certain retirement plan participants.

The bill signed into law also extends many tax provisions, known as “extenders”, through the 2020 tax year. Some of those provisions include the Work Opportunity Credit, the new Family and Medical Leave Credit created by the 2017 tax reform legislation and the ability to treat mortgage insurance premiums as qualified residence interest for tax deduction purposes. Additionally, the bill lowers the medical expense threshold back to 7.5% through 2020. We will provide more information on the individual provisions of the SECURE Act and how the law will impact planning for clients as we move into 2020. For more information on the credits extended by the year-end spending bill, visit Tax Facts Online. Read More

Appeals Court Finds ACA Individual Mandate Unconstitutional

The Fifth Circuit Appeals Court ruled that the ACA individual mandate is unconstitutional. However, it declined to invalidate the entire law. Instead, the case was remanded back to the lower court for more detail on other aspects of the law, including the employer mandate that continues in effect. For more information on the individual mandate, visit Tax Facts Online. Read More

IRS Releases Proposed Regulations on TCJA Executive Compensation Deduction Limits

As a follow up to interim guidance released in August, 2018, the IRS has released proposed regulations that clarify the definitions of covered employee, publicly held corporation and applicable employee remuneration. For more information on the new limits that apply, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (Jan 30, 2020)

Posted by William Byrnes on January 30, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin late May  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for Summer, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/

Editor’s Note:
A couple of interesting developments this week. The NAIC action towards creating a best interest standard for annuity sales follows moves by several states (most notably New York with its new Regulation 187) to create similar rules. While the NAIC has not yet taken any definitive action in this area, in the words of Bob Dylan “you don’t need a weatherman to know which way the wind blows.”

We also have more SECURE Act updates. The Act upped the penalties for anyone filing a Form 5500, and it has also expanded (again, following the 2017 tax reform law) the possible uses for 529 pans, making them an even more valuable planning tool.

NAIC Committee Votes to Pass Best Interest Standard for Annuity Sales

The Life Insurance and Annuities Committee of the National Association of Insurance Commissioners (NAIC) voted to pass a “best interest” standard that would apply to annuity sales. The NAIC standard would be contained in a model that could be passed by states to create a more uniform approach nationwide. The model law would focus on four key concepts: (1) duty of care, (2) disclosure obligations, (3) conflicts of interest and (4) documentation requirements. For more information on the factors that are important to determining whether an annuity is in a client’s best interest, visit Tax Facts Online. Read More

SECURE Act Increases Cost of Failing to File Form 5500

Form 5500 is a form that must be filed by most employers that offer an employee benefit plan subject to ERISA (exceptions do apply). The SECURE Act has significantly increased the penalties that the IRS may assess for failure to file (note that the DOL may also assess penalties. For more information on when a Form 5500 may be required, visit Tax Facts Online. Read More

SECURE Act Increases 529 Plan Value

The SECURE Act, which primarily impacts retirement-related provisions, also expands upon the permissible uses of Section 529 plan dollars to include apprenticeships and student loan payments. For more information on the use of 529 plan funds, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (Jan 29, 2020)

Posted by William Byrnes on January 29, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin late May  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for Summer, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/

Editor’s Note:

Several interesting updates this week, including New Jersey’s unique approach to SALT taxes, which allows optional entity-level taxation for pass-throughs in exchange for individual tax credits to be distributed to the members. We also see a new IRS Gig Economy Tax Center and the elimination of the “one bad apple” rule for MEPs with the SECURE Act.

Did we see you at the Heckerling estate planning conference last week? It was a week of warm sunshine and hot (well, OK, at least interesting) tax and estate planning developments. Happy planning!

Latest in the SALT Cap Saga: New Jersey Passes Pass-through Entity Tax Workaround

In the latest in the ongoing SALT cap debate, New Jersey has passed a new law creating an optional entity-level tax for pass-through entities. The New Jersey law allows pass-through entities to elect taxation at the entity level. In exchange, the members are given a refundable gross income tax credit. For more information on the SALT cap, visit Tax Facts Online. Read More

IRS Announces New “Gig Economy” Tax Center

More workers than ever are working in the gig, or freelance, economy–whether full-time or simply to supplement regular income. To keep up with the growing gig industry, the IRS has developed a new tool to help gig workers better understand and comply with their tax obligations. Taxpayers can access the site through irs.gov. For more information on the self-employment tax, visit Tax Facts Online. Read More

SECURE Act Eliminates the “One Bad Apple” Rule for MEPs—With Conditions

The one bad apple rule presented one of the primary roadblocks for small business owners interested in the multiple employer plan (MEP) structure. The SECURE Act provides that if one employer’s actions would disqualify the plan, only that employer’s portion of the MEP will be disqualified. For more information, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

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Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (Jan 28, 2020)

Posted by William Byrnes on January 28, 2020


Texas A&M University School of Law has launched its International Tax online graduate curriculum for tax professionals. Apply now for Jan 13 – April 19 transfer pricing courses.  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax

 

TAXFACTS

TaxFacts Intelligence Weekly

William H. Byrnes, J.D., LL.M. and Robert Bloink, J.D., LL.M.
Jan 09, 2020

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Editor’s Note: Mileage rates, UBTI for VEBAs, and 401(K)s for part-time employees under the SECURE Act

Vehicle-related reimbursement and deductions can be a big deal. Anyone who tracks mileage for work, medical, or charitable purposes is impacted by the changes in the IRS mileage rates, which have just been updated for 2020. We also have new UBTI rules for VEBAs, which were adopted in light of recent litigation. Finally, the SECURE Act mandates access to employer-sponsored 401(k)s to many part-time workers who could previously be excluded from participation. Learn what the new rules are, including how they impact nondiscrimination testing, with Tax Facts Online.

2020 IRS Business Standard Mileage Rates

In 2020, the optional standard mileage rate for using a car for business purposes will be 57.5 cents per mile driven for business purposes (the 2019 rate was 58 cents per mile). For more information on deducting business-related travel expenses, including medical and charitable mileage rates visit Tax Facts Online. Read More

IRS Regs Clarify UBTI Calculation for VEBAs and SUBs

The IRS has released regulations clarifying how voluntary employees’ beneficiary associations (VEBAs) and supplemental unemployment benefit trusts (SUBs) calculate unrelated business taxable income (UBTI) in light of recent litigation. For more information on the new rules and the related litigation, visit Tax Facts Online. Read More

SECURE Act Expands 401(k) Access for Long-Term, Part-Time Employees

Under the SECURE Act, employees who perform at least 500 hours of service for at least three consecutive years (and are at least 21 years old) must be allowed to participate in the employer-sponsored 401(k). These long-term, part-time employees may, however, be excluded from coverage and nondiscrimination testing requirements. For more information on 401(k) requirements, including detailed descriptions of the nondiscrimination testing requirements, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (Jan 2d, 2020)

Posted by William Byrnes on January 3, 2020


Texas A&M University School of Law has launched its International Tax online graduate curriculum for tax professionals. Apply now for Jan 13 – April 19 transfer pricing courses.  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax

Editor’s Note: Ending the Transportation and Parking Tax for Nonprofits, Wrangling the New Form W-4P, and Some SECURE Act Caveats for Inherited IRAs.

We continue to see odds and ends for the new year related to the passage of the SECURE Act. The Act eliminated the Transportation and Parking tax for nonprofits, and we also have an analysis of the caveats for the newly-limited stretch for inherited IRAs.

With the SECURE Act finally passed, the editorial team here at Tax Facts is working hard update all of the relevant content with the new changes. Tax Facts Online content is continually updated, and we will be compiling a white paper for our print customers outlining the changes with the new laws and how they track to the existing Tax Facts Q&As. As always, we strive to make accurate and insightful changes to Tax Facts that reflect the most current tax information available.

Tax-Exempt Entities Wave Goodbye to Tax Reform’s Transportation and Parking Tax
The Taxpayer Certainty and Disaster Relief Act of 2020, which contained the SECURE Act and addressed tax “extender” provisions, also repealed a controversial portion of IRC Section 512(a). Generally, tax-exempt entities were subject to a 21 percent tax on certain benefits, including use of parking facilities, provided to employees beginning in 2018. The new law repeals this expanded definition retroactively to the date of its enactment, to it is essentially as though the UBTI expansion was never enacted. For more information on the issue, visit Tax Facts Online. Read More
IRS Clears Up Questions on Tax Withholding from Retirement Accounts and Annuity Distributions in 2020
Tax withholding from retirement accounts and annuities is handled differently than ordinary employer income tax withholding. However, unless a taxpayer has opted out, payors of amounts from pensions, annuities and other sources are required to withhold for income taxes under Section 3405(a). The IRS guidance discusses how the new Form W-4P can be used for this, and notes that additional changes in later years may be considered. For more information on retirement plan withholding, visit Tax Facts Online. Read More
SECURE Act Limits the Stretch IRA After 2019—with Caveats
In previous years, as retirement accounts have grown in value, the idea of using the account to provide a tax-preferred legacy to future generations had grown in popularity. To offset some of the cost of the SECURE Act, Congress limited the value of the stretch for most taxpayers. Under the new law, most non-spouse account beneficiaries will be required to take distributions over a ten-year period. The new rule has some caveats, and applies for tax years beginning after December 31, 2019. For more information, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (December 12 edition)

Posted by William Byrnes on December 12, 2019


Texas A&M University School of Law has launched its International Tax online graduate curriculum for tax professionals. Apply now for Jan 13 – April 19 transfer pricing courses.  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax

IRS Provides New ACA Transition Relief for Employer Reporting

As usual, the IRS has released transition relief to extend the deadline for providing Form 1095-C to individuals from January 31, 2020 to March 2, 2020. However, unlike other years, the March 2 deadline is now a firm deadline and the IRS has indicated that it will no longer respond to requests for extension beyond that deadline. Form 1094-C and Form 1095-C that must be provided to the IRS are not subject to the extension. The employer must furnish these filings to the IRS by February 28, 2020 if the filing is on paper and March 31, 2020 if the employer is filing electronically. For 2019 forms, the IRS has extended the relief that may allow employers to escape liability if they make a good faith effort to comply with all filing requirements. Because the individual mandate has been reduced to $0, the IRS will also not impose a penalty under IRC Section 6722 upon employers who fail to provide Form 1095-B if certain requirements are satisfied. For more information, visit Tax Facts Online. Read More

December 31 Deadline to Take Full Advantage of Opportunity Zone Deferral is Fast Approaching

The Tax Cuts and Jobs Act introduced opportunity zones into the tax code, which allow taxpayers to defer certain gains if certain deadlines and requirements are satisfied. However, the law only gives taxpayers a limited amount of time to take full advantage of the deferral provisions. Specifically, December 31, 2019, is the deadline for taxpayers who wish to make opportunity zone investments and take full advantage of the 15% step-up in the deferred gains. Taxpayers who invest after this deadline (but before December 31, 2020) and hold the opportunity zone investment through 2026 will be entitled to take 10% step-up in basis (10% of the amount deferred) on the deferred tax. For more information on the opportunity zone rules, including the gain deferral provision, visit Tax Facts Online. Read More

Unpacking the New Section 6050Y Reporting Requirements for Life Insurance Reportable Policy Sales

The new 6050Y regulations create new reporting obligations for many who issue, acquire or sell life insurance policies in a reportable policy sale post-tax reform. An “issuer” under the new regulations is anyone that bears any part of the risk associated with the life insurance contract, including those collecting premiums and paying death benefits. However, where there are multiple issuers, the reporting obligations are satisfied if only one issuer or designee reports on a timely basis. New forms released by the IRS to complete the reporting obligations include Form 1099-LS, Reportable Life Insurance Sale and Form 1099-SB, Seller’s Investment in Life Insurance Contract. While some reporting requirements have been delayed, it’s important to understand the basics of these forms now. Form 1099-LS must be filed by anyone who acquires a life insurance policy (or interest therein) in a reportable policy sale. Basic information about the sale, policy, acquirer and seller must be included. Form 1099-SB must be filed by the issuer of the life insurance policy to report both the seller’s investment in the contract and the surrender amount if the sale is a reportable policy sale (or transferred to a foreign person). For more information on the new 6050Y reporting requirements, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (December 5 edition)

Posted by William Byrnes on December 6, 2019


Texas A&M University School of Law has launched its International Tax online graduate curriculum for tax professionals. Apply now for Jan 13 – April 19 transfer pricing courses.  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax

Final Regulations Confirm: No “Clawback” for Gifts Made Under Expanded Transfer Tax Exemption

The 2017 tax reform legislation significantly expanded the transfer tax exemption, which applies to exempt both lifetime and postmortem gifts from transfer taxes. However, the new provision is set to sunset after 2025, leading many taxpayers to question whether large gifts made while the provision is effective would be exempt once the exemption reverts to the much lower $5 million (as adjusted for inflation) limit. In general, the exemption applies first to gifts made during life and then to the individual’s remaining estate. Under the final regulations, estates are allowed to compute the available estate tax credit using the higher of the basic exclusion amount that applied to gifts made during life or the basic exclusion amount applicable on the date of death. Essentially, this rule provides certainty that taxpayers can make large gifts now (i.e., gifts that exceed the $5 million exemption) without generating transfer tax liability if the exemption amount is reduced in the future. For more information on the estate tax, visit Tax Facts Online. Read More

Court Finds Prudent Process Sufficient to Overcome DOL Fiduciary Liability

Many retirement plan sponsors and advisors have been left in uncertainty since the DOL fiduciary rule was vacated. A September 2019 case involving a DOL fiduciary enforcement action may shed light on resolution of fiduciary issues in the retirement plan context. In this case, the court found that retirement committee members were not liable under ERIA for a failure to monitor the committee’s investment manager more closely. The committee here had implemented processes and procedures, including regular meetings and reports, and acted in accordance with those procedures. After the DOL initiated action, the court agreed that the committee was entitled to rely upon those procedures. Once an error or problem arose and the committee became aware—or reasonably should have become aware—of the issue, the committee correctly increased its oversight until the issue was resolved. Here, that issue was that the committee’s instructions with respect to investments were not being followed. Once the committee noticed, they stepped up oversight. Importantly, this ruling shows that a prudent process is often sufficient to avoid fiduciary liability even if a decision results in investment losses. For more information on the fiduciary standard, visit Tax Facts Online. Read More

IRS Cracking Down on Syndicated Conservation Easements

In recently released IR-2019-182, the IRS announced that it has substantially increased resources to crack down on syndicated conservation easements. Under the IRC, a special rule allows taxpayers to take a deduction for donations of qualified conservation easements (an exception to the general rule prohibiting deductions for donations of less than an entire interest in property). A qualified conservation easement is a contribution of real property including a restriction (granted in perpetuity) for the use of the property, which must be used for conservation purposes. Syndications are often set up to purchase real property for conservation easements. Most syndications involve tiers of pass-through entities so that investors in the entities can more fully use the charitable deduction (which is subject to an adjusted gross income cap like any other charitable deduction). Often, the actual deduction will far exceed the amounts invested—sometimes because inflated property values are used. These and substantially similar arrangements are now classified as listed transactions, which must be disclosed to the IRS. Clients should be made aware of this increased potential for enforcement across several IRS divisions. For more information on the requirements for claiming a conservation easement deduction, visit Tax Facts Online. Read More

 

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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Byrnes & Bloink’s Thanksgiving TaxFacts Intelligence for Wealth Advisors

Posted by William Byrnes on December 3, 2019


Texas A&M University School of Law has launched its International Tax online curriculum for graduate degree candidates. Admissions is open for Jan 13 – April 19 transfer pricing courses.  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax

Often-Overlooked Section 1202 Tax Break for Small Business Adds New Value Post-Reform

Section 1202, while often overlooked by small business owners and investors alike, can provide a valuable tax benefit post-reform because many small businesses have transitioned to C corporation status to take advantage of the simpler 21 percent corporate tax rate. Section 1202 allows for an exclusion of up to 100 percent of gain realized when qualified small business stock is sold. To qualify, the stock must be acquired by the taxpayer when the stock was originally issued and held for at least five years. Further, the Section 1202 stock exclusion only applies to stock in C corporations with active businesses and assets of $50 million or less (measured when the stock is issued). Excluded gains are limited to the greater of: $10 million or 10 times the basis of the qualified small business stock. For more information on the exclusion, visit Tax Facts Online. Read More

IRS Expands Nondiscrimination Relief for Closed Defined Benefit Plans

Although the IRS has previously extended the nondiscrimination relief for closed DB plans in Notice 2014-5, newly released Notice 2019-60 also expands the relief to include relief from benefits, rights and features testing for closed plans. To qualify, the plan must have closed via amendments adopted before December 13, 2013. Notice 2019-60 does not change prior relief, but adds additional relief. Closed plans’ benefits, rights and features are treated as satisfying testing if the benefits, rights and features were provided at the time of the amendment closing the plan and one of two conditions are satisfied: (1) no amendments were adopted after January 29, 2016 that expanded or restricted eligibility for the benefits, rights and features or (2) if there was such an amendment, the benefit, right or feature does not benefit a relatively larger proportion of highly compensated employees (measured using the plan’s ratio percentage) than before the amendment. This relief is available for plan years ending after November 13, 2019 and before January 1, 2021. For more information on defined benefit plan nondiscrimination testing, visit Tax Facts Online. Read More

Advisory Fees Withdrawn From Annuity Not Treated as Distributions to the Owner

A recent IRS letter ruling found that investment advisory fees paid periodically from an annuity contract case value should not be treated as amounts received by the contract owner. The annuities in this case were nonqualified deferred annuities. As part of the annuity, the product owner would receive investment advice from a licensed advisor on how to allocate the case value of the contract. The fees were to be negotiated in an arm’s length transaction, but were not to exceed 1.5 percent of the annuity cash value. The fees were paid directly to the advisor (in other words, the owner would never receive the amounts deducted from the annuity value). The IRS found the fees “integral” to operation of the annuity contract based on the fact that the owner would receive ongoing investment advice. Further, the fees did not compensate the advisor for services related to any other asset (other than the annuity). The IRS concluded that the fees were an expense of the contract, not distributions to the owner. For more information on the tax treatment of nonqualified annuities, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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Byrnes & Bloink’s Actionable TaxFacts Intelligence Weekly for Financial Advisors

Posted by William Byrnes on November 20, 2019


Texas A&M University School of Law has launched its International Tax online curriculum for graduate degree candidates. Admissions is open for Jan 13 – April 19 transfer pricing courses.  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax

Final 401(k) Hardship Distribution Rules Take Effect January 1, 2020

Plan participants and sponsors should note that the final regulations governing 401(k) hardship distributions take effect in 2020. As of 2020, participants who take a hardship distribution must now be permitted to continue to make deferrals within the six months following the hardship distribution. While some aspects of the new rules are optional, this new requirement is mandatory with respect to qualified plans. For more information on hardship distributions, visit Tax Facts Online. Read More

IRS Releases Proposed Regs on Accounting for Advance Payments

The IRS has released proposed regulations implementing changes made by the 2017 tax reform legislation that impact the tax treatment of advance payments. The regulations generally adopt the rules contained in Revenue Procedure 2004-34— the approach in place prior to tax reform. For more information on the tax treatment of advance payments, visit Tax Facts Online. Read More

IRS FAQ Provides for Specific Identification in Transactions Involving Virtual Currency

The recently released FAQ on the tax treatment of virtual currency confirms that transactions in bitcoin and other forms of virtual currency will be taxed as transactions in property. The guidance goes further and answers the question of whether taxpayers should identify particular virtual currency that is part of a transaction. For more information on the tax treatment of bitcoin, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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Byrnes & Bloink’s TaxFacts Intelligence Weekly – Actionable Analysis for Financial Advisors

Posted by William Byrnes on November 9, 2019


2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Texas A&M University School of Law has launched its International Tax online curriculum for graduate degree candidates. Admissions is open for Spring (January) semester for the transfer pricing courses.  Texas A&M University is a public university of the state of Texas and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). 

199A Rental Real Estate Safe Harbor Excludes Certain Businesses

Not all taxpayers will be able to take advantage of the Section 199A safe harbor for rental real estate. While the safe harbor does apply to residential rental real estate, taxpayers are not entitled to rely upon the safe harbor if the taxpayer uses the property as a residence during the tax year. Notably, if the real estate is rented or leased under a triple net lease, the safe harbor remains unavailable under the final rule. When satisfying the “hours of rental real estate services” criteria, only certain activities are counted toward the 250-hour threshold. Activities such as rent collection, advertising the rental, property maintenance, negotiating leases and managing the real property generally count toward the threshold. However, the taxpayer’s activities as an “investor” are not counted. Similarly, if any property within the rental real estate enterprise is classified as a specified service trade or business, the safe harbor is unavailable for the entire business. For more information on the final safe harbor rule, visit Tax Facts Online. Read More

DOL Proposes New Electronic Disclosure Rules for Pension Plans

In response to the Trump administration’s executive order, the DOL has proposed a safe harbor rule that would allow pension plans to satisfy disclosure obligations electronically. As currently proposed, the rule only applies to pension plans. It would allow plan sponsors to email required documents to participants, beneficiaries and any other individuals entitled to receive disclosures–so long as the individual has provided an email address (which can be a work email address). Any documents required under Title I of ERISA could be furnished electronically, including notices of material modification or blackout notices, except for documents that must be furnished upon request. While employers are not yet entitled to rely upon this rule until it is finalized, it provides important insight into potential future developments surrounding pension disclosure obligations. For more information on the requirements that apply to pension plans, visit Tax Facts Online. Read More

District Court Rules Small Business Qualified Retirement Plan Not Exempt in Bankruptcy

While 401(k) funds are generally exempt from a bankruptcy debtor’s estate, a recent district court ruling highlights a situation where a small business owner may lose the exemption. In this case, the taxpayer maintained a pension plan pursuant to a prototype plan document offered by his financial institution that had been approved via an IRS opinion letter, as is commonly the case. The court, however, found that amendments to the prototype plan document rendered the opinion invalid. Further, it found that the plan inappropriately benefitted the taxpayer and his spouse, rather than providing benefits to employees, in violation of IRS nondiscrimination rules. Because of this, the plan was deemed to be disqualified despite the fact that the taxpayer relied upon advisors to manage the plan. Because the taxpayer was owner of the small business responsible for the plan, he was deemed to be materially responsible for the qualification failure, therefore causing the plan assets to lose the typically available bankruptcy exemption. The court noted that this probably wouldn’t have been the case if the taxpayer had been an employee participating in a non-qualified plan. For more information on the treatment of 401(k) assets in bankruptcy, visit Tax Facts Online. Read More

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TaxFacts Intelligence Weekly of Aug 1, 2019 – Actionable Analysis for Financial Advisors

Posted by William Byrnes on August 5, 2019


2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

Tuition Waiver for International Tax Online Courses (more information here)

Texas A&M University School of Law will launch August 26, 2019 its International Tax online curriculum for graduate degree candidates. Admissions is open for the inaugural cohort of degree candidates to pilot the launch of the Fall semester introductory courses of international taxation and tax treaties, and provide weekly feedback on content, support, and general experience in exchange for waiving the tuition and providing the books free.  Texas A&M University is a public university of the state of Texas and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). 

IRS Expands List of Preventative Care Coverage Not Subject to HDHP Deductibles
Pursuant to the executive order directing the agencies to expand the use of HSAs and HDHPs for individuals suffering from certain chronic conditions, the IRS has released Notice 2019-45, which expands the definition of “preventative care” to include certain treatments and medications related to chronic illnesses. Generally, HDHPs may now provide these forms of care on a pre-deductible basis without jeopardizing the plan’s status as an HDHP and the participant’s ability to use HSA funds in connection with that HDHP. The agencies have indicated that they will review the new list, which includes items deemed to be “low cost”, every five to ten years. The new table, contained Notice 2019-45, includes items such as glucometers for patients suffering from diabetes and beta blockers for patients suffering from congestive heart failure. For more information on HDHPs, visit TaxFacts Online. Read More
 

IRS Releases Premium Tax Credit-Related Inflation Adjustments for 2020
The IRS has released the Affordable Care Act (ACA) premium tax credit-related inflation adjusted numbers for use in 2020. In 2020, the percentage used to determine whether an individual is eligible for employer-sponsored health insurance that is affordable is 9.78% (down from 9.86% in 2019). This means that individuals who contribute more than 9.78% of their household income toward health insurance in 2020, he or she may be eligible for premium tax credit assistance. For more information on determining when health coverage is deemed affordable for ACA purposes, visit Tax Facts Online. Read More

 

IRS Announces Compliance Campaign Directed at S Corps
The IRS has announced that one of the areas it will be focusing its compliance efforts upon in the coming year involves S corporations that were formerly C corporations. The primary issue of focus will be the built-in gains tax. In general, the built-in gains tax applies to C corporations that convert to S status at a time when they have net unrealized built-in gain, and then sell assets within five years after converting to an S corporation. The tax should be paid at the S corporation level, but the IRS has determined that the tax is often not paid. While this does not necessarily mean that audit resources will be directed toward these entities, it does mean that the IRS has determined that it is necessary to dedicate training and resources toward the goal of ensuring proper compliance with the built-in gains tax. For more information on situations where S corporations may be taxed at the entity level, visit Tax Facts Online. Read More

 

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TaxFacts Intelligence Weekly of July 25, 2019 – Actionable Analysis for Financial Advisors

Posted by William Byrnes on July 26, 2019


2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

William H. Byrnes, J.D., LL.M. and Robert Bloink, J.D., LL.M.

Jul 25, 2019

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Taxpayer Cannot Shield Self-Directed IRA Assets from Bankruptcy Creditors

The 11th Circuit recently confirmed that a taxpayer was not entitled to creditor protection in bankruptcy with respect to a self-directed IRA that he used for impermissible purposes. The issue in this case was not whether IRA funds were used for prohibited personal use, however, but whether the assets left within the IRA could be protected from creditors in bankruptcy. The court ruled that the creditors could access amounts left in the IRA, regardless of whether that IRA continued to be tax-exempt, because the taxpayer failed to properly maintain the IRA by withdrawing funds for prohibited reasons in the past. For more information on the tax treatment of IRA assets in bankruptcy, visit Tax Facts Online. Read More

Proposed Regulations Would Eliminate the MEP “One Bad Apple Rule”

The IRS and Treasury have released proposed regulations that would eliminate the so-called “one bad apple rule” for multiple employer plans (MEPs). Under the one bad apple rule, the entire MEP could be disqualified based upon the actions of only one employer that participated in the plan. To qualify, the plan must have established practices and procedures designed to ensure compliance by all MEP participants. The failure must be isolated to a single employer, and cannot be a widespread issue across the employers. The plan administrator must have a process in place that would provide notice to the employer responsible for the failure, and such notice should include a description of the failure, actions necessary to remedy the failure, notice that the relevant employer has only 90 days from the notice date to take remedial action, a description of the consequences for failure to take the remedial action and notice of the right to spin off the non-compliant employer’s portion of the plan and assets. After providing the initial notice and two subsequent notices, the MEP must notify all participants, stop accepting contributions from the noncompliant party and implement spin off procedures designed to terminate the noncompliant employer’s interests in the MEP. For more information on plan qualification requirements, visit Tax Facts Online. Read More

Considering an Opportunity Zone Investment? Here’s How to Tell the IRS

Now that the IRS has released a significant amount of guidance on the opportunity zone rules, qualified opportunity zone funds are likely to become more common, leading taxpayers to question how to actually defer taxation on their capital gains through the opportunity zone rules. Taxpayers who have made a sale where the proceeds qualify for capital gain treatment may invest all or a part of that gain in a qualified opportunity fund and defer recognizing the gain under the new opportunity zone rules. The taxpayer makes the election on his or her tax return by attaching a completed Form 8949 to the return. For multiple investments occurring on different dates, the taxpayer uses multiple rows of the form to report the deferral election. If the taxpayer has already filed the relevant tax return, he or she will need to file an amended return to make the election. For more information on the opportunity zone rules, visit Tax Facts Online. Read More

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TaxFacts Intelligence Weekly

Posted by William Byrnes on December 3, 2018


TAX DEVELOPMENTS

SEC Announces New Disclosure Requirements for Variable Annuities and Life Insurance 
The SEC recently proposed a rule change designed to improve disclosures with respect to variable annuities and variable life insurance contracts. The new disclosure obligations would help investors understand the features, fees and risks to these types of products in an effort to allow investors to make more informed investment decisions. Under the proposal, annuity and life insurance carriers would be entitled to provide information to investors in a summary prospectus form that would provide a more concise summary of the terms of the contract. For more information on variable annuities, visit Tax Facts Online and Read More.

Digging Into the Details of Hardship Distributions for Primary Residence Purchases
Qualified plans can to allow participants to take hardship distributions to help with the purchase of a primary residence. The distribution must be directly taken to purchase the residence–items such as renovations made prior to move-in do not qualify. Despite this, the distribution can cover more than just the purchase price of the residence itself. Closing costs would also qualify, as would the cost of a piece of land upon which the primary residence would be built. If a participant buys out a former spouse’s interest in a jointly-owned home pursuant to divorce, the distribution would also qualify. For more information on the hardship distribution rules, visit Tax Facts Online and Read More.
Avoiding Gift Tax Traps This Holiday Season
Most taxpayers believe that they are not required to file a gift tax tax return if they do not owe gift taxes–as many will not because of the current $11.18 million gift tax exemption will shield most donors from gift tax liability. Despite this, each gift made during a donor’s lifetime serves to reduce that $11.18 million amount, which applies both to lifetime gifts and transfers made at death. Taxpayers must file Form 709 to report taxable gifts in excess of the annual exclusion amount to avoid potential IRS penalties for failure to file a return. The form is required not because gift taxes are owed, but to provide the IRS with a mechanism for tracking any given taxpayer’s use of the exemption amount during life. For more information on the gift tax filing requirements, visit Tax Facts Online and Read More.

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IRS provides tax inflation adjustments for tax year 2019

Posted by William Byrnes on November 23, 2018


The Internal Revenue Service was very late (only on November 15) in announcing the tax year 2019 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2018-57 provides details about these annual adjustments. The tax year 2019 adjustments generally are used on tax returns filed in 2020.

The tax items for tax year 2019 of greatest interest to most taxpayers include the following dollar amounts:

  • The standard deduction for married filing jointly rises to $24,400 for tax year 2019, up $400 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,200 for 2019, up $200, and for heads of households, the standard deduction will be $18,350 for tax year 2019, up $350.
  • The personal exemption for tax year 2019 remains at 0, as it was for 2018, this elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act.
  • For tax year 2019, the top rate is 37 percent for individual single taxpayers with incomes greater than $510,300 ($612,350 for married couples filing jointly). The other rates are:

o 35 percent, for incomes over $204,100 ($408,200 for married couples filing jointly);

o 32 percent for incomes over $160,725 ($321,450 for married couples filing jointly);

o 24 percent for incomes over $84,200 ($168,400 for married couples filing jointly);

o 22 percent for incomes over $39,475 ($78,950 for married couples filing jointly);

o 12 percent for incomes over $9,700 ($19,400 for married couples filing jointly).

o The lowest rate is 10 percent for incomes of single individuals with incomes of $9,700 or less ($19,400 for married couples filing jointly).

  • For 2019, as in 2018, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act.
  • The Alternative Minimum Tax exemption amount for tax year 2019 is $71,700 and begins to phase out at $510,300 ($111,700, for married couples filing jointly for whom the exemption begins to phase out at $1,020,600). The 2018 exemption amount was $70,300 and began to phase out at $500,000 ($109,400 for married couples filing jointly and began to phase out at $1 million).
  • The tax year 2019 maximum Earned Income Credit amount is $6,557 for taxpayers filing jointly who have three or more qualifying children, up from a total of $6,431 for tax year 2018. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phase-outs.
  • For tax year 2019, the monthly limitation for the qualified transportation fringe benefit is $265, as is the monthly limitation for qualified parking, up from $260 for tax year 2018.
  • For calendar year 2019, the dollar amount used to determine the penalty for not maintaining minimum essential health coverage is 0, per the Tax Cuts and Jobs act; for 2018 the amount was $695.
  • For the taxable years beginning in 2019, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements is $2,700, up $50 from the limit for 2018.
  • For tax year 2019, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,350, an increase of $50 from tax year 2018; but not more than $3,500, an increase of $50 from tax year 2018. For self-only coverage, the maximum out-of-pocket expense amount is $4,650, up $100 from 2018. For tax year 2019, participants with family coverage, the floor for the annual deductible is $4,650, up from $4,550 in 2018; however, the deductible cannot be more than $7,000, up $150 from the limit for tax year 2018. For family coverage, the out-of-pocket expense limit is $8,550 for tax year 2019, an increase of $150 from tax year 2018.
  • For tax year 2019, the adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit is $116,000, up from $114,000 for tax year 2018.
  • For tax year 2019, the foreign earned income exclusion is $105,900 up from $103,900 for tax year 2018.
  • Estates of decedents who die during 2019 have a basic exclusion amount of $11,400,000, up from a total of $11,180,000 for estates of decedents who died in 2018.
  • The annual exclusion for gifts is $15,000 for calendar year 2019, as it was for calendar year 2018.
  • The maximum credit allowed for adoptions is the amount of qualified adoption expenses up to $14,080, up from $13,810 for 2018.

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Tax Facts was first published in 1951 in a slim, 137-page volume covering the income, estate and gift tax aspects of life insurance and annuity ownership, titled Tax Facts on Life Insurance. Since that first year, the breadth and depth of Tax Facts coverage has grown to include employee benefits, business continuation, individual and qualified retirement plans, as well as decades of hard-to-find rulings and clarifications of longstanding regulations.  In 1983, Tax Facts grew to two volumes, with the second covering investments of all types: stocks, bonds, mutual funds, real estate, and the tax requirements related to each. What began as a 234-page book grew rapidly as tax reform in the 1980s multiplied the rules covering the treatment of investments.

In 2010 Tax Facts expanded to its current 4 volume and online format.  In its 67-year history, Tax Facts has become the financial advisor industry’s standard for clear, up-to-date thorough tax information. Now in an all-inclusive online format, every answer, ruling and table is easier than ever to find.

Tax Facts is the place I go to find the answers to those tough life insurance questions that no one else has – and to check those they do. It’s THE SOURCE for authoritative income, estate, and gift tax information on life insurance and annuity contracts.”

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TaxFacts Intelligence Weekly Nov 16th

Posted by William Byrnes on November 16, 2018


IRS Releases Guidance on Impact of Personal Exemption Suspension on Premium Tax Credit
The 2017 tax reform legislation suspended the personal exemption for tax years beginning after 2017 and before 2026. Relatedly, taxpayers are entitled to claim the Affordable Care Act premium tax credit with respect to an individual if the taxpayer has claimed an exemption with respect to that taxpayer (i.e., the personal or dependency exemption). A taxpayer is entitled to claim the premium tax credit with respect to another individual if the taxpayer would otherwise be entitled to claim a dependency exemption with respect to that individual, and includes the individual’s name and TIN on his or her Form 1040. For more information, visit Tax Facts Online and Read More.
OTHER IMPORTANT DEVELOPMENTS

Grandfathering Potential May Still Exist Under Section 162(m) Post-Regulations
The IRS regulations governing the new limitations on the Section 162(m) executive compensation deduction limits may have curtailed grandfathering opportunities that some had expected under the new tax law, but possibilities still remain. The test for determining whether grandfather treatment is permitted involves whether the company was legally obligated to pay the compensation under state law (meaning contract law) as of November 2, 2017. For more information on the new rules governing the deductibility of executive compensation, visit Tax Facts Online and Read More.

LITIGATION WATCH

Tax Court Rules Business-Provided Life Insurance Taxable to Insured Individual Under Split Dollar Rules
The Tax Court recently ruled that the “economic benefit” of business-sponsored life insurance provided to a key employee through a multiple-employer welfare benefit fund was taxable income to the employee. The Tax Court agreed with the IRS that this structure required current income inclusion under the split dollar life insurance principles, so that the economic benefit received by the employee was required to be included in his gross income for the year in question despite the fact that no actual cash benefits were received during that year. For more information on the rules governing split dollar life insurance, visit Tax Facts Online and Read More.

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TaxFacts Intelligence Weekly

Posted by William Byrnes on September 21, 2018


TAX REFORM DEVELOPMENTS

IRS Provides Guidance Updating Accounting Method Changes for Terminated S Corporations
The 2017 tax reform legislation added a new IRC section that now requires eligible terminated S corporations to take any Section 481(a) adjustment attributable to revocation of the S election into account ratably over a six-year period. Under newly released Revenue Procedure 2018-44, an eligible terminated S corporation is required to take a Section 481(a) adjustment ratably over six years beginning with the year of change if the corporation (1) is required to change from the cash method to accrual method and (2) makes the accounting method change for the C corporation’s first tax year. For more information on the rules governing S corporations that convert to C corporation status post-reform, visit Tax Facts Online and Read More.
OTHER IMPORTANT DEVELOPMENTS

IRS Guidance on Interaction between New Association Health Plan Rules and ACA Employer Mandate
The IRS recently released new guidance on the rules governing association health plans (AHPs), which permit expanded access to these types of plans, and the Affordable Care Act (ACA) employer mandate. The guidance provides that determination of whether an employer is an applicable large employer subject to the shared responsibility provisions is not impacted by whether the employer offers coverage through an AHP. Participation in an AHP does not turn an employer into an applicable large employer if the employer has less than 50 employees. For more information on the employer mandate, visit Tax Facts Online and Read More.

OCC Explains Employee Tax Consequences of Employer’s Belated Payment of FICA Tax on Fringe Benefits
The IRS Office of Chief Counsel (OCC) released a memo explaining the tax consequences of a situation where the employer failed to include $10,000 of fringe benefits. The employer paid the FICA taxes associated with the benefits in 2018, although the benefits were provided in 2016. The guidance provides that the payment in 2018 did not create additional compensation for the employee in 2016. If the employer collects the amount of the employee portion of the FICA tax from the employee in 2018, the employer’s payment is not additional compensation. However, if the employer does not seek repayment, the payment of the employee’s portion is additional compensation. For more information on FICA tax issues in the employment benefit context, visit Tax Facts Online and Read More.
LITIGATION WATCH

Employer Amendments to VEBA Did Not Result in Adverse Tax Consequences
The IRS recently ruled that an employer could amend its voluntary employees’ beneficiary association (VEBA) to provide health benefits for active employees in addition to retired employees without violating the tax benefit rule or incurring excise taxes. In this case, the VEBA provided health benefits for collectively bargained retired employees. When the VEBA became overfunded, the employer proposed transferring the excess assets into a subaccount for collectively bargained active employees. The IRS found that this proposed amendment would not violate the tax benefit rule because, the new purpose of providing health benefits to active employees under a collective bargaining agreement was not inconsistent with the employer’s earlier deduction. For more information on VEBAs, visit Tax Facts Online and Read More.
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Will Trump Keep His Promise that No One’s Retirement Will Be Taken Away?

Posted by William Byrnes on November 16, 2017


The 2017 Tax Reform discussion originally was, like the 1986 discussion, about whether the Internal Revenue Code should be used for incentives and subsidy in favor of a particular activity or particular group of taxpayers. Broaden the base, lower the rates, simplify the variations, exceptions, and exemptions. But the dueling Chamber proposals are now out and tax reform based on equity and on eliminating tax-incentives was dead on arrival. It the same old ‘every interest’ vying for a portion of the pie. That’s the democratic, political “Gulchi Gulch” process. What is my interest then? I work for a public research university. I have ‘a dog in this fight’ described below. Hope that the government relations staff of NTEU, of state universities, and of other government employee stakeholder groups raise their voices like the Seraphim to the Republican members of the Finance Committee that are willing to listen.

So what’s so alarmed me to divert my attention to the retirement provisions of the Senate Chair’s mark? Did not the President state that retirement would be left alone (see his tweet here)?  Appears the Senate ignored him as usual.

The Senate Finance Committee Chair slipped in (at page 178) an explosive measure for government employees that also impacts public academic institutions. The Senate Finance Committee Tax Reform Chair’s Mark under the current status (November 9, 2017) will limit public employees to one aggregate amount of $18,500 for retirement plans 403(B) and 457 as of January 1, 2018.

Finance Committee Chair Proposal: The proposal applies a single aggregate limit to contributions for an employee in a governmental section 457(b) plan and elective deferrals for the same employee under a section 401(k) plan or a 403(b) plan of the same employer. Thus, the limit for governmental section 457(b) plans is coordinated with the limit for section 401(k) and 403(b) plans in the same manner as the limits are coordinated under present law for elective deferrals to section 401(k) and section 403(b) plans.

Government, including public educational institution, employees needs to become immediately aware that this provision will critically reduce their ability to contribute to their employer retirement plan(s) by $18,500 (or $24,500 for employees 50 years and older) as of January 1, 2018.  Thus, while there is still time to make December 1st contribution changes to preserve the last year of the additional $18,000 (or $24,000 if at least 50 years of age), these employees need to arrange with their payroll officers to contribute before December 31st any difference between what is allowed in 2017 and what has actually been contributed. As of January 1, 2018, the ability to contribute is gone forever.

Hatch Amendment #2 An amendment to the catch up contribution rules for section 401(k), 403(b) and 457)(b) retirement savings plans. Description of Amendment: This amendment would require all catch up contributions to section 401(k), 403(b) and 457(b) retirement savings plans to be Roth only, and increase the $6,000 catch up contribution annual limit applicable to such plans to $9,000.

See what he’s done here to Americans trying to save for retirement? At age 50 plus, we will pay on average – say 30 percent – for each catchup retirement dollar. How many years does it take to catchup with this 30 percent loss out the door? Based on historical annual average market returns, it will require four years to break even on the 30 percent loss. Only in year five will the 50-year-old, based on historical returns, start to earn towards retirement relative to her situation today in 2017. Where does our 30 percent loss out the door go? To pay for …. an energy credit? I don’t know. The revenue raised is relatively minuscule. The damage to retirement savings – tremendous.

Lack of Impact Analysis on Retirement and Public Employees

Curiously, I have not found many informative articles about the impact to retirement from these above-mentioned changes. Why is it silence from the public university crowd that is usually quite loud although this provision will damage their ability to attract researchers, faculty, and staff from the higher compensation opportunities of private educational institutions and for-profit industry?  Are we embarrassed to appear to be lobbying to keep a tax break? Just caught by surprise?  At least the NAGDCA has sent out an alert (Government Defined Contribution Administrators) to its members.

Instead of the beneficial retirement system, government agencies and public institutions need to find more revenue to pay competitive salaries and employee benefits to replace the loss of the retirement benefits (doubtful) Senate Finance will take away. Lacking better salaries, government agencies and public institutions will experience disproportionate employee turnover of the best performing management coupled with a declining ability to attract highly accomplished professionals and researchers to replace the pool.

Is this Payback Against the IRS?

Perhaps this provision is a Republican payback to government agencies like the IRS because Republicans think that the current government management pool is biased against Republican groups or lacks service for taxpayers? But taking out the best performing managers from government service will exasperate the challenges, not remediate them. If this is a ‘payback’, then it is “cutting off one’s nose”.  Perhaps the provision is but a Machiavellian move in a contest for talent between a state university and its private counterpart (Utah v BYU comes to mind)?

Maybe the silence from the government and public institutions employees is ‘heads in the sand’, and perhaps ‘those in the know’ think this provision will not survive because JCT scored it as only worth $100 million a year at least until 2021 (so why waste the political capital). Apportioned amongst all government employees in the US (being federal and state), state public academic institutions I suspect are less than 10 percent of this score, thus about $10 million a year for offset (inconsequential basically).

Can Public Institutions Be Saved?

A carve-out from this provision for public educational institutions would address the harmful issue and can be negotiated in response to the also proposed loss of the current carve-out for deferrals allowed for section 403(b) plan for at least 15 years of service to an educational organization, hospital, home health service agency, health and welfare service agency, and church. Seems to me that Republicans would prefer to incentivize via retirement doctors, nurses, social workers, and clergy to stay long-term in their public positions instead of paying higher government salaries.

Interested to learn the impact on your clients of the 2018 tax changes, and what to do about it?  Read the online version of Tax Facts.

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Retirement: Pros, cons, commissions and costs of fixed-index annuities

Posted by William Byrnes on August 17, 2015


Fixed index annuities are the current flavor and will remain so while consumers perceive the market indexes potentially rising,” says William Byrnes, an associate dean at Texas A&M University School of Law in Fort Worth.

Sales of FIAs rose 14% to $38.7 billion in 2013 and another 24% to $48 billion in 2014, or about 21% of all annuity sales …

read the USA Today analysis of Fixed Index Annuities at USA Today and whether these are a good fit for a retirement plan.

Posted in Retirement Planning | Tagged: , | 3 Comments »

weekly financial planning strategies

Posted by William Byrnes on March 24, 2015


Deferred Income Annuities’ Flex Pay Appeals to Younger Investors

A flurry of regulatory activity has put deferred income annuities (DIAs) in the spotlight frequently in the past year, with many billing DIAs as the up-and-coming option for clients to ensure sufficient income even at an advanced age. Often overlooked,…

QLACs Change the Game in Social Security Timing

Qualified longevity annuity contracts (QLACs) have, in theory, existed for nearly three years, but it’s only in recent months that insurance carriers have begun to offer these products—finally making the QLAC a realistic planning option. While the purpose behind the…
5 Hot Retirement Planning Topics for 2015

Here are some of the top retirement planning trends that your clients need to be aware of in order to maximize their retirement account values in 2015 and beyond. 1: QLACs Become a Reality … 2) Split 401(k) Rollovers Maximize…

Posted in Retirement Planning, Wealth Management | Leave a Comment »

10 most tax-friendly states for retirees

Posted by William Byrnes on March 23, 2015


NU logoEvery client’s goals are different when it comes to choosing where to retire, but from a tax perspective, there are some clear winners that can allow a client to maximize the value of accumulated retirement savings.

While the client’s lifestyle choices — a desire for an expensive home vs. spending on consumer products, for example — greatly impact the tax system that will provide the most substantial benefits, below is a list of ten of the top states for retirees, from a tax perspective. read the analysis of Prof. William Byrnes and Robert Bloink in National Underwriter Life Health Pro

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Tax Time Guide: Still Time to Contribute to an IRA for 2014

Posted by William Byrnes on March 18, 2015


IRS logo“Taxpayers still have time to contribute to an IRA for 2014 and, in many cases, qualify for a deduction or even a tax credit”, stated the IRS in this week’s newswire (50-IR-2015). (see 7 Tax Facts for Making IRA Contributions)

Available in one form or another since the mid-1970s, individual retirement arrangements (IRAs) are designed to enable employees and self-employed people to save for retirement. Contributions to traditional IRAs are often deductible, but distributions, usually after age 59½, are generally taxable. Though contributions to Roth IRAs are not deductible, qualified distributions, usually after age 59½, are tax-free. Those with traditional IRAs must begin receiving distributions by April 1 of the year following the year they turn 70½, but there is no similar requirement for Roth IRAs.

see 5 Tax Facts for Year End IRA

Most taxpayers with qualifying income are either eligible to set up a traditional or Roth IRA or add money to an existing account. To count for 2014, contributions must be made by April 15, 2015. In addition, low- and moderate-income taxpayers making these contributions may also qualify for the saver’s credit when they fill out their 2014 returns.

see Can an individual roll over or convert a traditional IRA or other eligible retirement plan into a Roth IRA?

Eligible taxpayers can contribute up to $5,500 to an IRA. For someone who was at least age 50 at the end of 2014, the limit is increased to $6,500. There’s no age limit for those contributing to a Roth IRA, but anyone who was at least age 70½ at the end of 2014 is barred from making contributions to a traditional IRA for 2014 and subsequent years.

The deduction for contributions to a traditional IRA is generally phased out for taxpayers covered by a workplace retirement plan whose incomes are above certain levels. For someone covered by a workplace plan during any part of 2014, the deduction is phased out if the taxpayer’s modified adjusted gross income (MAGI) for that year is between $60,000 and $70,000 for singles and heads of household and between $0 and $10,000 for married persons filing separately. For married couples filing a joint return where the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range for the deduction is $96,000 to $116,000. Where the IRA contributor is not covered by a workplace retirement plan but is married to someone who is covered, the MAGI phase-out range is $181,000 to $191,000.

see When Are IRA Funds Taxed?

The deduction for contributions to a traditional IRA is claimed on Form 1040 Line 32 or Form 1040A Line 17. Any nondeductible contributions to a traditional IRA must be reported on Form 8606.

Even though contributions to Roth IRAs are not deductible, the maximum permitted amount of these contributions is phased out for taxpayers whose incomes are above certain levels. The MAGI phase-out range is $181,000 to $191,000 for married couples filing a joint return, $114,000 to $129,000 for singles and heads of household and $0 to $10,000 for married persons filing separately. For detailed information on contributing to either Roth or traditional IRAs, including worksheets for determining contribution and deduction amounts, see Publication 590-A, available on IRS.gov.

see Recharacterizing Roth IRAs Smartly: Use Multiple Roths

Also known as the retirement savings contributions credit, the saver’s credit is often available to IRA contributors whose adjusted gross income falls below certain levels. For 2014, the income limit is $30,000 for singles and married persons filing separate returns, $45,000 for heads of household and $60,000 for married couples filing jointly.

Eligible taxpayers get the credit even if they qualify for other retirement-related tax benefits. Like other tax credits, the saver’s credit can increase a taxpayer’s refund or reduce the tax owed. The amount of the credit is based on a number of factors, including the amount contributed to either a Roth or traditional IRA and other qualifying retirement programs. Form 8880 is used to claim the saver’s credit, and its instructions have details on figuring the credit correctly.

see High-income clients able to fund Roth IRAs?

Tax Facts on Individuals & Small Business

2014_tf_on_individuals_small_businesses-m_1Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor.  Financial advisors are continually looking for competitive information to help them provide the best answers for their clients and to obtain new clients.  National Underwriter’s Tax Facts series is the only resource written specifically for the financial advisor and producer providing fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts has been famous over 50 years.

Anyone interested can try Tax Facts Online risk-free for 30 days, with a 100% guarantee of complete satisfaction.  Call 1-800-543-0874.

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Longevity Pegged Annuities – What’s Changed With The Final Regulations

Posted by William Byrnes on February 12, 2015


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Longevity Pegged Annuities – What CPAs Need to Know About the New Rules (William Byrnes & Robert Bloink)

The Treasury Department made sparks fly when it recently issued final regulations governing qualified longevity annuity contracts (QLAC).

read the full story at CPA Journal of the New York Society of Certified Public Accountants http://viewer.zmags.com/publication/8df8c3b9#/8df8c3b9/66

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5 Tax Facts for Year End IRA

Posted by William Byrnes on December 11, 2014


Individual Retirement Accounts are an important way to save for retirement. A taxpayer who has an IRA or who may open one soon need to be aware of four key year-end Tax Facts.

1. What is the IRA Annual Contribution Limit for 2014?  A taxpayer can contribute up to a maximum of $5,500 ($6,500 if 50 or older) to a traditional or Roth IRA. If a taxpayer files a joint return with a spouse, each taxpayer may contribute to an IRA even if only one has taxable compensation.  In some cases, the taxpayer may need to reduce the income tax deduction allowed for the traditional IRA contributions.  This income tax deduction reduction applies if one of the spouses has a retirement plan already at work and their combined income is above a certain level.

2. What is the Last Day to Contribute to 2014 IRA Limit? A taxpayer can actually contribute in 2015 toward the 2014 IRA contribution maximum amount allowed, but the last day for such catch up contribution is April 15, 2015 (the date the tax return for 2014 is due).

3. What is the Penalty for Contributing More Than the Limit?  A taxpayer is subject to a six percent tax on the excess contribution above the IRA contribution limit for the year.  Worse though, the tax applies each year that the excess amount remains in the IRA account.  To avoid this penalty, a taxpayer must withdraw the excess amount from the IRA by April 15, 2014, or by the date of any 2014 filing extension.

4. When Must a Taxpayer Begin Taking the IRA Required Minimum Distributions (RMD)?  When a taxpayer reaches age 70½, then a required minimum distribution, or RMD, is required from a traditional IRA.  However, a Roth IRA does not have a RMD.  The RMD is required by Dec. 31, 2014.  But the deadline is April 1, 2015 if the taxpayer reached 70½ in 2014.

When a taxpayer has more than one traditional IRA, then the RMD calculation is required to be made separately for each IRA. But, the total RMD can be withdrawn from just one, or more of them.  The penalty for not taking the full annual RMD amount is a 50 percent excise tax on the RMD amount not withdrawn.

5. What is the Saver’s credit?  The formal name of the saver’s credit is the retirement savings contributions credit. A taxpayer may potentially qualify for this credit if contributing to an IRA or retirement plan. The saver’s credit can increase the tax refund or reduce the tax owed for 2014.

2015_tf_on_indiv_sm_business_cover-mTax Facts on Individuals & Small Business focuses exclusively on what individuals and small businesses need to know to maximize opportunities under today’s often complex tax rules.  It is the essential tax reference for financial advisors, & planners; insurance professionals; CPAs; attorneys; and other practitioners advising small businesses and individuals.

Organized in a convenient Q&A format to speed you to the information you need, Tax Facts on Individuals & Small Business delivers the latest guidance on:
• Healthcare & New Medicare Tax and Net Investment Income tax
• Business Deductions and Losses including Home Office
• Contractor vs. Employee — clarified!
• Business Life Insurance
• Small Business Entity Choices & Small Business Valuation
• Capital Gains & Investor Losses
• Accounting — including guidance on how standards change as the business grows

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Will the IRS Help Pay for Your Retirement ?

Posted by William Byrnes on November 17, 2014


IRS logoIf you are a low-to-moderate income worker, you can take steps now to save two ways for the same amount. With the saver’s credit you can save for your retirement and save on your taxes with a special tax credit. Here are six tips you should know about this credit:

1. Save for retirement.  The formal name of the saver’s credit is the retirement savings contributions credit. You may be able to claim this tax credit in addition to any other tax savings that also apply. The saver’s credit helps offset part of the first $2,000 you voluntarily save for your retirement. This includes amounts you contribute to IRAs, 401(k) plans and similar workplace plans.

2. Save on taxes.  The saver’s credit can increase your refund or reduce the tax you owe. The maximum credit is $1,000, or $2,000 for married couples. The credit you receive is often much less, due in part because of the deductions and other credits you may claim.

3. Income limits.  Income limits vary based on your filing status. You may be able to claim the saver’s credit if you’re a:

• Married couple filing jointly with income up to $60,000 in 2014 or $61,000 in 2015.

• Head of Household with income up to $45,000 in 2014 or $45,750 in 2015.

• Married person filing separately or single with income up to $30,000 in 2014 or $30,500 in 2015.

4. When to contribute.  If you’re eligible you still have time to contribute and get the saver’s credit on your 2014 tax return. You have until April 15, 2015, to set up a new IRA or add money to an existing IRA for 2014. You must make an elective deferral (contribution) by the end of the year to a 401(k) plan or similar workplace program.

If you can’t set aside money for this year you may want to schedule your 2015 contributions soon so your employer can begin withholding them in January.

5. Special rules apply.  Other special rules that apply to the credit include:

• You must be at least 18 years of age.

• You can’t have been a full-time student in 2014.

• Another person can’t claim you as a dependent on their tax return.

IRS Resources

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How Did Deferred Annuities Emerge As the Preferred 401(k) Investment?

Posted by William Byrnes on November 13, 2014


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The IRS has cleared the path for 401(k) sponsors who wish to expand clients’ use of longevity insurance within 401(k)s by allowing target date funds (TDFs) to include deferred annuities, even for those plan participants who do not actively manage their investment allocations.

read about The New IRS Guidance

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COLA Increases for Dollar Limitations on Benefits and Contributions

Posted by William Byrnes on September 22, 2014


IRS logoThe Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans.  IRC Section 415 requires the limits to be adjusted annually for cost-of-living increases.  The IRS announced on October 31, 2013 cost-of-living adjustments applicable to dollar limitations for pension plans and other items for tax year 2014.

Please see the COLA Increases Table below for prior years’ dollar limitations and Internal Revenue Code references.


 

2014 2013

2012

IRAs

IRA Contribution Limit $5,500 $5,500 $5,000
IRA Catch-Up Contributions 1,000 1,000 1,000

IRA AGI Deduction Phase-out Starting at

Joint Return 96,000 95,000 92,000
Single or Head of Household 60,000 59,000 58,000

SEP

SEP Minimum Compensation 550 550 550
SEP Maximum Contribution 52,000 51,000 50,000
SEP Maximum Compensation 260,000 255,000 250,000

SIMPLE Plans

SIMPLE Maximum Contributions 12,000 12,000 11,500
Catch-up Contributions 2,500 2,500 2,500

401(k), 403(b), Profit-Sharing Plans, etc.

Annual Compensation 260,000 255,000 250,000
Elective Deferrals 17,500 17,500 17,000
Catch-up Contributions 5,500 5,500 5,500
Defined Contribution Limits 52,000 51,000 50,000
ESOP Limits 1,050,000
210,000
1,035,000205,000 1,015,000200,000

Other

HCE Threshold 115,000 115,000 115,000
Defined Benefit Limits 210,000 205,000 200,000
Key Employee 170,000 165,000 165,000
457 Elective Deferrals 17,500 17,500 17,000
Control Employee (board member or officer) 105,000 100,000 100,000
Control Employee (compensation-based) 210,000 205,000 205,000
Taxable Wage Base 117,000 113,700 110,100

 

2014_tf_on_individuals_small_businesses-m_1Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This book provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.

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Recharacterizing Roth IRAs Smartly: Use Multiple Roths

Posted by William Byrnes on September 11, 2014


International Financial Law Prof Blog –

The benefits of creating a stream of tax-free income during retirement is key to most successful retirement income strategies, and a Roth conversion that allows the client to “undo” the transaction if investments perform poorly is an attractive option for accomplishing this goal. However, despite the benefits that recharacterizing a Roth conversion can offer, this route can sometimes function as a double-edged sword by erasing the gains on successful investments within the account. Despite this, …

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Fixed Annuity Sales Rising in 2014, but Why ?

Posted by William Byrnes on September 10, 2014


International Financial Law Prof Blog – New studies show that, despite relatively stable conditions, fixed annuity sales have increased considerably in 2014 over 2013, as a perhaps unexpected number of clients flock toward these traditional guaranteed income products. 

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myRA: Making Retirement Planning Work Your Small Business

Posted by William Byrnes on August 6, 2014


SBA logo

SBA Webinar registration

This free webinar will focus on “myRA” (“My Retirement Account”), a new retirement savings account for individuals looking for a simple, safe, and affordable way to start saving.  Savers will be able to open an account for as little as $25 and contribute $5 or more every payday.  myRA balances will never go down, and there will be no fees. Initially, myRA will be made available through employers and the investment held in the account will be backed by the U.S. Treasury.

  • Date:Tue, Aug 12, 2014
  • Time:01:00 PM EDT
  • Duration:1 hour
  • Host(s):United States Treasury Department, Small Business Administration
  • Presenter: Cynthia Egan – Senior Advisor, Office of Domestic Finance, U.S. Department of the Treasury

For businesses, making myRA available to employees is straight-forward.  Treasury will handle account set-up and maintenance and will provide informational materials for business owners to share with their employees.  There is no employer-match or contribution.  In fact, all that interested employers have to do is to make Treasury-provided program materials available to their employees and set-up ongoing payroll direct deposits into myRA for interested employees.  myRA is intended for employees who do not have access to an employer-sponsored plan or who are not eligible for their employer’s plan.  myRA is not intended to replace current employer-sponsored retirement plan offerings.

Topics being discussed include:

  • Overview of myRA
  • Benefits of the program
  • Steps for employer adoption

A question and answer period will follow.

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Indexed Annuities and Guaranteed Lifetime Withdrawal Benefits (GLWBs)

Posted by William Byrnes on July 23, 2014


While finding the most suitable products to meet a client’s retirement income goals is fundamental to developing an appropriate retirement planning strategy, discovering the most desirable mixture of product features can prove equally critical.

In this vein, advisors should take note that indexed annuity sales have gained steam in recent months.  New studies suggest that while the base product itself may be attractive to many, in the vast majority of cases it is the optional features that are actually propelling sales.

Understanding how the guarantee features that can accompany indexed annuities have made these products competitive against more traditional bank-sponsored products has, therefore, become crucial to determining how these options can help an indexed annuity rise to the occasion.

Read the intelligence about guaranteed lifetime withdrawal benefits (GLWBs) and annuities of Professor William Byrnes and Robert Bloink at ThinkAdvisor

tax-facts-online_medium

Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.  The authors’ knowledge and experience in tax law and practice provides the expert guidance for National Underwriter to once again deliver a valuable resource for the financial advising community,” added Rick Kravitz.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.

 

 

 

If you are interested in discussing the Master or Doctoral degree in the areas of financial services or international taxation, please contact me: profbyrnes@gmail.com

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Annuities and Long Term Care Does the Rider Fit?

Posted by William Byrnes on July 15, 2014


Protection against future long-term care (LTC) expenses is important for all clients.  For the right client, combining LTC insurance with an annuity product can make all the difference between comfort and anxiety late in life.

That the need for LTC coverage is relatively universal, however, does not mean that the analysis of a particular combination annuity-LTC product is any less nuanced.

Just as every client is different, not all LTC riders are created equally—and your advice can prove crucial in finding the most suitable product for the individual client.

Read the thoughts of Professor William Byrnes and Robert Bloink on long term care annuity riders at ThinkAdvisor.

tax-facts-online_medium

Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.  The authors’ knowledge and experience in tax law and practice provides the expert guidance for National Underwriter to once again deliver a valuable resource for the financial advising community,” added Rick Kravitz.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.

Interested in exploring a Master or Doctoral degree in the areas of financial services or international taxation? Let’s talk. profbyrnes@gmail.com Watch my youtube video by clicking on the logo to the left.

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Indexed Variable Annuities (IVAs) v. Structured Annuities

Posted by William Byrnes on July 14, 2014


Indexed variable annuities (IVAs) and structured annuities are two relatively new types of hybrid annuity products that are causing rampant confusion in today’s annuity marketplace. Used properly, these products can perform a significant role in a client’s portfolio, making it more important than ever to understand the nuances of these two annuity types.

The investment options offered by IVAs and structured annuities are extremely varied — in terms of opportunities for both market participation and downside protection — making the issue of client suitability particularly important. Today’s clients are looking for a customized product.

So it is time to begin asking: When it comes to IVAs and structured annuities, which product is the right fit?  Read the answer of Professor William Byrnes and Robert Bloink at LifeHealthPro

 

tax-facts-online_medium

Because of the constant changes to the tax law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. For over 110 years, National Underwriter has provided fast, clear, and authoritative answers to financial advisors pressing questions, and it does so in the convenient, timesaving, Q&A format.

Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.  The authors’ knowledge and experience in tax law and practice provides the expert guidance for National Underwriter to once again deliver a valuable resource for the financial advising community,” added Rick Kravitz.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.


If you are interested in discussing the Master or Doctoral degree in the areas of financial services or international taxation, please contact me: profbyrnes@gmail.com to Google Hangout or Skype that I may take you on an “online tour”

 

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