Tax Alert: New Overtime Rules Effective December 1, 2016

Under current law, most employees making $23,660 or less per year automatically qualify for overtime after 40 hours worked per week. The new rule recently issued by the U.S. Department of Labor (DOL) would raise that threshold to $47,476, effective December 1, 2016.

The impact of this new regulation will vary amongst businesses. It is important for every employer to assess the impact of these regulations now and to implement any changes that may be deemed necessary for compliance purposes in a way that is most cost effective and beneficial to their business.

As always, we are happy to answer any questions you may have regarding this tax matter.

Retirement Planning: The Accumulation Phase

Retirement Planning is by far one of the most important areas of financial planning and one that we allocate a good portion of our time and resources to address. We break retirement planning up into two distinct phases:

1) Accumulation Phase

2) Distribution Phase

The accumulation phase is simply the phase in which you are still working and gathering assets to fund the distribution phase. Clients in the distribution phase are usually either retired or semi-retired, and are supplementing their pre-retirement income with distributions from their portfolios. This article is Part 1 of a two-part series on retirement planning and will address the Accumulation Phase of retirement planning.
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You Hit the Jackpot! Now What?

On your recent vacation to Las Vegas or on your night out at The Borgata you finally hit the big jackpot that you’ve been waiting for! Now what are the tax implications? Gambling income can come from various sources such as lotteries, casinos, raffles, bingo, etc. Your gambling income includes cash winnings as well as the fair market value of prizes.

The IRS requires that all gambling winnings be reported on your individual tax return and treated as “ordinary income.” All gambling winnings are reported on your Form 1040, Line 21 (Other Income) unless you are a professional gambler (then your gambling winnings and losses are on reported on Schedule C). Depending on the amount of your winnings, you may receive one or more Forms W-2G, which report the amount of your winnings as well as the amount of tax that was withheld, if any. You will need these forms to prepare your individual tax return.
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Quickbooks Tip of the Month: May

Did you know that you can save images of receipts using Quickbooks Online Mobile? This app can be downloaded free for Android devices from the Google Play Store or for iPad and iPhone devices from iTunes. Data such as expenses can be directly entered into Quickbooks online with a copy of the receipt attached. The expense will be imported directly into Quickbooks. This feature reduces the risk of losing important data and eliminates cluttered office space. In addition, Quickbooks Online Mobile app can be used for sales receipts, estimates, invoices and payments. The app allows users to have an image and notes attached to almost any transaction. For example, attach an image of a sample window to an estimate and send it to the client within minutes. Internet access such as a data plan or wi-fi connection is required.

Ask Your Accountant May 2016

I am opening a new business that will be operating as a partnership. How do I draw a paycheck?

~ Carrie Gill

You don’t. Partners, and members of LLCs taxed as partnerships, are considered to be self-employed, not employees when performing services for the partnership. The payments that a partner receives for services to a partnership are generally referred to as guaranteed payments. While guaranteed payments are taxable to the partner, these payments are not considered to be pay to an employee. As such, there will not be any withholding tax through payroll deductions. To avoid a tax shortfall when your tax return is filed, it is important to plan for these taxes, most commonly by making estimated tax payments.   The partner’s allocable share of net income of the business and the guaranteed payments for services are reported to the partner annually on a Form k-1 generated by the business. The partner will be subject to both income tax and self-employment tax (Social Security and Medicare taxes) on his/her share of the “self-employment income” from the business. Partners can also receive distributions of capital (their investment) as a result of their ownership interest in the partnership, which is often a tax-free return of post-tax items including their investment and allocable earnings.

What Every Board Member Should Know About 501(c)(3)

What it Means to be a Director of a Public Charity

By: Donna Buzby, CPA

What is a 501©(3) Organization?

Being a 501(c)(3) organization means that the organization has been approved by the Internal Revenue Service as a tax-exempt, charitable organization. The IRS includes a number of organizational purposes as being “charitable.” These are:

  • Religious
  • Educational
  • Charitable
  • Scientific
  • Literary
  • Testing for public safety
  • Fostering of national or international amateur sports
  • Prevention of cruelty to animals and children

501(c)(3), Exempt and Nonprofit
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Choosing the Right Business Entity

By: Michael Salad

There are numerous reasons why owners should form business entities. One of the most common questions that arise is what type of business entity a business owner should form. Many business owners wish to form a limited liability company (“LLC”). However, a subchapter S corporation (“S Corp”) provides several tax advantages that are unavailable to LLCs.

First, formation of an S Corp allows shareholders to reduce their self-employment tax liability. Self-employment taxes are based upon an individual’s self-employment income for the year. Self-employment tax consists of old-age, survivors, and disability insurance (“OASDI”) and hospital insurance.
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Is There a Student in the Family?

Capaldi Reynolds & Pelosi | Is There a Student in the Family?You could be eligible for some tax breaks in the form of a deduction or, better yet, a tax credit. Unfortunately, most of these tax breaks phase out based on income so be aware that filing status and income can limit the tax benefits.
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Business Health Checkup: Business Performance

Capaldi Reynolds & Pelosi | Business PerformanceWhen we think of business performance consulting or business financial consulting, we may think of these services as appropriate for struggling or underperforming businesses. In our years of consulting, that is not the typical situation. While we work with some businesses facing temporary challenges, we most often provide services to high performing companies which are striving to reach the next level. The business owner may feel that despite good performance, if some adjustments were made to the business strategy then the business could grow or become more profitable. Maybe after years of solid performance the business has plateaued and the owners would like some fresh ideas. Other owners set new goals to expand, and they aren’t exactly sure how they will achieve them.
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332 Tilton Road
Northfield, NJ 08225
phone: (609)641-4000

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