Tax breaks for charitable giving aren’t limited to individuals, your small business can benefit as well. If you own a small to medium size business and are committed to giving back to the community through charitable giving, here’s what you should know.

1. Verify that the Organization is a Qualified Charity.

Once you’ve identified a charity, you’ll need to make sure it is a qualified charitable organization under the IRS. Qualified organizations must meet specific requirements as well as IRS criteria and are often referred to as 501(c)(3) organizations. Note that not all tax-exempt organizations are 501(c)(3) status, however.

There are two ways to verify whether a charity is qualified: use the IRS online search tool or ask the charity to send you a copy of their IRS determination letter confirming their exempt status.Continue reading

Once again, tax planning for the year ahead presents a number of challenges, first and foremost being what tax reform measures (if any) will actually become legislation–and when they take effect (e.g. retroactive to January 1, 2017, or a future date). Furthermore, a number of tax extenders expired at the end of 2016, which may or may not be reauthorized by Congress and made retroactive to the beginning of the year. And then, of course, there are the normal variations in individual tax circumstances such as the sale of a home that could bump up income into another tax bracket.

With this in mind, let’s take a look at some of the tax strategies you can use given the current uncertainties.Continue reading

Congratulations to Managing Partner, Matt Wheeler and his wife Jenny on the birth of their third child. Alexandra Mary Wheeler was born on November 7, 2017. She weighed 6 lbs 7 oz and was 19 inches long. Mom and baby are doing well. Sister, Samantha and brother, Devin are thrilled to have a baby sister.

 

Congratulations to Nick Satterfield, Senior Accountant, who married his high school sweetheart, Shelby on Saturday, November 4^th. The wedding took place in Burlingame, close to where Nick and Shelby’s families live. The event was filed with family and friends. Wheeler wishes Nick and Shelby the best as they enjoy their new life together.

House Republicans released a sweeping overhaul tax plan on Thursday, November 2nd which includes a broad set of proposed changes to the corporate and individual tax system. Below is summary of major changes proposed.

 

 

New individual tax brackets

Single filers
	2017		Proposed under Trump’s Tax Plan
10%	$0 – $9,325	12%	$0-$45,000
15%	$9,326 – $37,950
25%	$37,951-$91,900	25%	$45,001-$200,000
28%	$91,901-$191,650
33%	$191,650-$416,700	35%	$200,001-$500,000
35%	$416,701-$418,400
39.6%	$418,401 or more	39.6%	$500,001 or more
Standard Deduction: $6,350		Standard Deduction: $12,000
Personal exemption: $4,050		Personal exemption: Eliminated
Joint filers
	2017		Proposed under Trump’s Tax Plan
10%	$0 – $18,650	12%	$0-$90,000
15%	$18,651-$75,900
25%	$75,901-$153,100	25%	$90,001-$260,000
28%	$153,101-$233,350
33%	$233,351-$416,700	35%	$260,001-$1,000,000
35%	$416,701-$470,700
39.6%	$470,701 or more	39.6%	$1,000,001 or more
Standard Deduction: $12,700		Standard Deduction: $24,000
Personal exemption: $8,100		Personal exemption: Eliminated

Other Changes:

• Itemized Deductions: Retains the mortgage interest and charitable deductions, as well as property tax deductions (capped at $10,000), but eliminates the remainder of state and loan tax deductions and other itemized deductions
• Other Deductions and Exclusion: Caps the mortgage interest deductions at $500,000 of principal of new home purchases. Eliminates the moving deduction, educator expense deduction, and exclusions for employer-dependent care programs, among others. Makes changes to the exclusion of capital gains on home sales.
• Family Tax Credits: Replaces the personal exemptions for dependents with an expansion of the child tax credit from $1,000 to $1,600, while increasing the phaseout threshold (from $115,000 to $230,000 for married filers). The first $1,000 will be refundable.
• Alternative minimum tax: Eliminates alternative minimum tax.

Business Taxes

• Corporate Tax Rate: Lowers the corporate tax rate from 35 to 20 percent.
• Pass-Through Rate: Creates a new 25 percent maximum tax rate on pass-through business income, subject to anti-abuse rules.
• Pass-Through Anti Abuse Rules: 70 percent of income derived from a business is compensation subject to ordinary rates of the owners and 30 percent is business income subject to the maximum 25 percent rate for active owners. Certain specified service industries, like health, law, financial services, professional services, and the performing arts are excluded from the 70/30 split and can only claim the benefit of the lower pass-through rate to the extent that they can “prove out” their business income.
• Capital investment: Allows full expensing of short-lived capital investment (currently subject to “bonus” depreciation), such as equipment and machinery, for five years. Increases Section 179 expensing from $500,000 to $5 million and increases the phaseout threshold from $2 million to $20 million.
• Tax Treatment of Interest: Limits the deductibility of net interest expense on future loans to 30 percent of earnings before interest, taxes, depreciation, and amortization (EBITDA), with a five-year carryforward, for all businesses with gross receipts of $25 million or more.
• Alternative Minimum Tax: Eliminates the corporate alternative minimum tax.
• International Income: Moves to a territorial tax system, in which foreign-source dividends and profits of U.S. companies are not subject to U.S. tax upon repatriation. However, 50 percent of excess returns (those greater than a routine return, defined as AFR plus 7 percent) earned by controlled foreign corporations (CFCs) are included in U.S. shareholders’ gross income. In addition, payments made from US corporations to a related foreign corporation are subject to a 20 percent excise tax unless the US corporation claims the transaction as effectively connected income (ECI). ECI is added to the taxable income of the US corporation, but the related foreign corporation’s expenses can be deducted from this income.
• Deemed Repatriation: Enacts deemed repatriation of currently deferred foreign profits, at a rate of 12 percent for cash and cash-equivalent profits and 5 percent for reinvested foreign earnings.

Estate Tax

• Increases the estate tax exemption to $10 million, which is indexed for inflation, and repeals the estate tax after six years.

 

 

Wheeler Accountants took their spookiness to a whole new level this year! We had a great turn out for our annual Halloween costume contest. The administrative team went all out on their Wheeler branded prison outfits. The votes were cast and the administrative team took the prize for best outfits.

Susan Conners, EA and Senior Tax Specialist, has been chosen as Employee of the Quarter. Sue joined Wheeler in 2016 as part of our merger with Leonard Williams, CPA. Sue brought a wealth of experience to Wheeler and has been a welcome addition to our team. Sue has provided a great deal of support for our Estate and Trust department, is responsive and is very thorough with her work. Our clients enjoy her calm, reassuring communication style and our Partners, Managers and staff appreciate that she is always willing to pitch in and help others wherever needed. Congratulations to Sue and thank you for all the hard work!