Michael A. Georges to Lead Yeo & Yeo’s Nonprofit Services Group

Yeo & Yeo CPAs & Business Consultants is pleased to announce Michael A. Georges, CPA, as the leader of the firm’s Nonprofit Services Group. He will lead the strategic direction and management of the firm’s state-wide Group, and oversee the Group’s business development, training and staff development.

Georges is a principal with more than 30 years of public accounting experience, and a passion for working with nonprofits. His areas of expertise include tax planning and preparation for individuals, businesses and nonprofit organizations, as well as audit services for the government, education and nonprofit sectors. He is also a member of the firm’s Tax Services Group and the Education Services Group.

“Mike serves many nonprofit clients and has an immense amount of tax, audit and consulting experience,” says David Youngstrom, principal and the firm’s Audit Service Line Leader. “He strengthens the Group with his ability to train, advise and guide the firm’s nonprofit clients in the financial aspects of running a successful nonprofit.”

Georges is a member of Michigan School Business Officials. He is based in the firm’s Ann Arbor office. In addition to his work at Yeo & Yeo, Georges serves on the board of directors of the Grosse Ile Educational Foundation and the board of directors of Child’s Hope Child Abuse Prevention Council of OutWayne.

The 21^st Century Cures Act, which was signed into law December 13 primarily to fund medical research, also included provisions that allow small employers to provide Health Reimbursement Arrangements (HRAs) to employees. This means that for tax years beginning after December 31, 2016, small employers may establish a plan to reimburse employees for out-of-pocket medical expenses and/or health insurance premiums. These reimbursements are deductible to the small employer, but generally are not taxable to employees.

A “Qualified Small Employer HRA” must meet the following requirements:

Employer must employ fewer than 50 full-time employees.
Employer may not offer a group health plan to any of its employees.
Reimbursements must be made on the same terms for all employees (though employees under age 25, part-time or seasonal, under a collective bargaining agreement or employees with fewer than 90 days of service may be excluded).
Must be funded by the employer (no salary reduction contributions).
Employees must provide proof of health insurance coverage in order to be eligible to participate.
Reimbursement plans for individuals may not exceed $4,950 per year, while plans allowing for reimbursement for all family members are capped at $10,000. This amount will be subject to annual cost-of-living adjustments. For arrangements in force for less than a 12-month period, these amounts are prorated.

In order to participate in an HRA, employers must provide notice to employees explaining the employees’ permitted benefits under the arrangement and the employees’ responsibility to maintain minimum essential healthcare coverage. Verbiage also must include information for employees applying for tax credits on any governmental health exchange. This employee notice is due 90 days before the beginning of the plan year, but due to the timing of the passage 100c of the Act, this has been extended to March 13, 2017, for this year only.

Please contact us if you would like us to assist you in determining whether a Health Reimbursement Arrangement is right for your business or organization.

Take a moment and think about all of the security features that are used to keep your organization’s network safe. Passwords and firewalls help keep the bad guys away from your vital information. But all of these security measures don’t mean a thing if someone clicks on a malware link inside an email.

As phishing attacks have grown, so too has the emphasis on Cybersecurity. In fact, according to the recent IBM X-Force Research’s 2016 cybersecurity Intelligence Index, the manufacturing sector is now one of the most frequently hacked industries, second only to healthcare. A tool that many are using to help prevent cyberattacks within their organization is security awareness training as a way to educate employees. Having knowledge of malware and phishing is as important as having proper antivirus and firewall protection.

How does security awareness training work?

A security awareness training provider will begin the training process with an email exposure check that shows which email addresses within an organization’s domain are being exposed to spear-phishing attacks on the Internet. This service looks deep into websites, Word, Excel and PDF files that are on the Internet. By performing these tests, business owners and managers can see which employees are the most susceptible to phishing emails. Training modules soon follow to teach employees what to look for.

Statistics show that it works

Security awareness training helps turn your employees into your organization’s first firewall. Through training, employees become the best defense you can have. We aggregated the numbers and the overall Phish-prone percentage dropped from an average of 15.9 percent to an amazing 1.2 percent in just 12 months. The combination of web-based training and frequently simulated phishing attacks really works.

Manufacturing is a target too

Cybersecurity continues to be a concern in the manufacturing industry. In the Verizon 2016 Data Breach Investigations Report, the manufacturing industry is listed as a top target of cyber-espionage. Cyber-espionage features external hacking threats that infiltrate victim networks seeking sensitive internal data and trade secrets. The tactics used by hackers to gain information through cyber-espionage begins with phishing and malware. For hackers, phishing is the most efficient way to get the information they want to hold for ransom.

Manufacturing companies are urged to do their research and perform the following to help mitigate cyber-attacks:

Perform an annual IT risk assessment to see where threats are coming from.
Use penetration testing to simulate threats.
Conduct vulnerability scans throughout the year and stay updated on new threats.

It’s important to remember that everyone is a target of phishing attacks. These attacks happen every day, but the good news is they can be prevented. Proper training is great a great way to prevent attacks, but equally important is having a proper backup and disaster recovery plan in place. Nothing is bullet-proof in IT, but being prepared for any circumstance can help save money and downtime in the event of a disaster.

For more information about security awareness training, contact your Yeo & Yeo advisor or Jeff McCulloch, President of Yeo & Yeo Technology, jefmcc@yeoandyeo.com or 800.607.1446.

Here are some of the key tax-related deadlines affecting businesses and other employers during the first quarter of 2017. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

January 31

File 2016 Forms W-2, “Wage and Tax Statement,” with the Social Security Administration and provide copies to your employees.
File 2016 Forms 1099-MISC, “Miscellaneous Income,” reporting nonemployee compensation payments in Box 7 with the IRS, and provide copies to recipients.
File Form 941, “Employer’s Quarterly Federal Tax Return,” to report Medicare, Social Security and income taxes withheld in the fourth quarter of 2016. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until February 10 to file the return. Employers that have an estimated annual employment tax liability of $1,000 or less may be eligible to file Form 944,“Employer’s Annual Federal Tax Return.”
File Form 940, “Employer’s Annual Federal Unemployment (FUTA) Tax Return,” for 2016. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it’s more than $500, you must deposit it. However, if you deposited the tax for the year in full and on time, you have until February 10 to file the return.
File Form 945, “Annual Return of Withheld Federal Income Tax,” for 2016 to report income tax withheld on all nonpayroll items, including backup withholding and withholding on accounts such as pensions, annuities and IRAs. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year in full and on time, you have until February 10 to file the return.

February 28

File 2016 Forms 1099-MISC with the IRS and provide copies to recipients. (Note that Forms 1099-MISC reporting nonemployee compensation in Box 7 must be filed by January 31, beginning with 2016 forms filed in 2017.)

March 15

If a calendar-year partnership or S corporation, file or extend your 2016 tax return. If the return isn’t extended, this is also the last day to make 2016 contributions to pension and profit-sharing plans.

Donations to qualified charities are generally fully deductible, and they may be the easiest deductible expense to time to your tax advantage. After all, you control exactly when and how much you give. To ensure your donations will be deductible on your 2016 return, you must make them by year end to qualified charities.

When’s the delivery date?

To be deductible on your 2016 return, a charitable donation must be made by Dec. 31, 2016. According to the IRS, a donation generally is “made” at the time of its “unconditional delivery.” But what does this mean? Is it the date you, for example, write a check or make an online gift via your credit card? Or is it the date the charity actually receives the funds — or perhaps the date of the charity’s acknowledgment of your gift?

The delivery date depends in part on what you donate and how you donate it. Here are a few examples for common donations:

Check. The date you mail it.

Credit card. The date you make the charge.

Pay-by-phone account. The date the financial institution pays the amount.

Stock certificate. The date you mail the properly endorsed stock certificate to the charity.

Is the organization “qualified”?

To be deductible, a donation also must be made to a “qualified charity” — one that’s eligible to receive tax-deductible contributions.

The IRS’s online search tool, Exempt Organizations (EO) Select Check, can help you more easily find out whether an organization is eligible to receive tax-deductible charitable contributions. You can access EO Select Check at http://apps.irs.gov/app/eos. Information about organizations eligible to receive deductible contributions is updated monthly.

Many additional rules apply to the charitable donation deduction, so please contact us if you have questions about the deductibility of a gift you’ve made or are considering making. But act soon — you don’t have much time left to make donations that will reduce your 2016 tax bill.

There are many ways to save for a child’s or grandchild’s education. But one has annual contribution limits, and if you don’t make a 2016 contribution by December 31, the opportunity will be lost forever. We’re talking about Coverdell Education Savings Accounts (ESAs).

How ESAs work

With an ESA, you contribute money now that the beneficiary can use later to pay qualified education expenses:

Although contributions aren’t deductible, plan assets can grow tax-deferred, and distributions used for qualified education expenses are tax-free.
You can contribute until the child reaches age 18 (except beneficiaries with special needs).
You remain in control of the account — even after the child is of legal age.
You can make rollovers to another qualifying family member.

Not just for college

One major advantage of ESAs over another popular education saving tool, the Section 529 plan, is that tax-free ESA distributions aren’t limited to college expenses; they also can fund elementary and secondary school costs. That means you can use ESA funds to pay for such qualified expenses as tutoring and private school tuition.

Another advantage is that you have more investment options. So ESAs are beneficial if you’d like to have direct control over how and where your contributions are invested.

Annual contribution limits

The annual contribution limit is $2,000 per beneficiary. However, the ability to contribute is phased out based on income.

The limit begins to phase out at a modified adjusted gross income (MAGI) of $190,000 for married filing jointly and $95,000 for other filers. No contribution can be made when MAGI hits $220,000 and $110,000, respectively.

Maximizing ESA savings

Because the annual contribution limit is low, if you want to maximize your ESA savings, it’s important to contribute every year in which you’re eligible. The contribution limit doesn’t carry over from year to year. In other words, if you don’t make a $2,000 contribution in 2016, you can’t add that $2,000 to the 2017 limit and make a $4,000 contribution next year.

However, because the contribution limit applies on a per beneficiary basis, before contributing make sure no one else has contributed to an ESA on behalf of the same beneficiary. If someone else has, you’ll need to reduce your contribution accordingly.

Would you like more information about ESAs or other tax-advantaged ways to fund your child’s — or grandchild’s — education expenses? Contact us!

Yeo & Yeo CPAs & Business Consultants is pleased to announce A.J. Licht, CPA, as the leader of the firm’s Construction Services Group. He will be responsible for the strategic direction and management of the firm’s state-wide Group, and oversee the Group’s business development, training and staff development.

Licht is a manager with six years of public accounting experience. His areas of expertise include business consulting for management, financial reporting and tax planning and preparation with an emphasis in the construction sector, review and compilation services, and accounting software consulting.

“A.J. is very active in construction associations in the Great Lakes Bay Region and he is serving an increasing number of the firm’s construction clients. He brings a renewed passion for the construction services that Yeo & Yeo provides,” says Carol Patridge, principal in the firm’s Kalamazoo office and the previous leader of the Construction Services Group. “His vision for the Group will serve our clients well.”

Licht is a member of the Associated Builders & Contractors Greater Michigan Chapter, Home Builders Association of Saginaw and the Construction Industry CPAs/Consultants Association. He is based in the firm’s Saginaw office. In addition to his work at Yeo & Yeo, Licht is treasurer of the Saginaw Township Business Association. He is a member of the Saginaw Valley Young Professionals Network and the Saginaw County Chamber of Commerce, and is a Habitat for Humanity volunteer.

Yeo & Yeo CPAs & Business Consultants is proud to sponsor the 1^st Annual Saginaw Spirit Superhero Hockey Night to benefit the CAN Council Great Lakes Bay Region. Each child that attends the game on Saturday, January 14^th will receive a superhero cape (adult capes are also available for purchase). Attendees are welcome to wear their favorite superhero costume to the game in support of the night’s theme. Special game jerseys will be auctioned after the game in support of the CAN Council.

Fundraising tickets for this event are being sold at the special price of $13 each, with $5 from each ticket to benefit the CAN Council. Tickets can be purchased at the Saginaw Spirit office, at either CAN Council office, and from a CAN Council board or staff member. Tickets may also be purchased online using the group ticket link: https://www.saginawspirit.net/groupsales/, with the username: cancouncil, password: spirit.

Promotional packages are available including sponsoring a Foster Family so they too can attend the game. If interested, please contact the CAN Council office (989) 752-7226 for more information.

During the game, the CAN Council will present Gary & Laura Shepard and their family, creators of the Freeland Light Show, with the first ever CAN Council Superhero Awards. These awards are given to individuals who are making a positive impact on the lives of children throughout the Great Lakes Bay Region. Please join us during the game on Saturday, January 14^th as we honor the Shepard Family, our 2017 CAN Council Superheroes on ice.

Yeo & Yeo is pleased to provide 2017 Tax Planning Calendars and other helpful tax planning resources.

What are the due dates for next year’s tax filings? When are the various tax payments due?

The 2017 Tax Calendar for Business and the 2017 Tax Calendar for Individuals and Trusts are valuable tools to help you plan for the deadlines.

What can you do now – before year-end – to save tax dollars?

Yeo & Yeo’s 2016 Year-end Tax Planning Checklist of action items may help you or your business save tax dollars. Please review the checklist and contact us soon if you would like help with deciding which tax-saving moves to make.

For more extensive information, visit Yeo & Yeo’s Tax Guide Online.

You may be aware of the rule that allows businesses to deduct bonuses employees have earned during a tax year if the bonuses are paid within 2½ months after the end of that year (by March 15 for a calendar-year company). But this favorable tax treatment isn’t always available.

For one thing, only accrual-basis taxpayers can take advantage of the 2½ month rule — cash-basis taxpayers must deduct bonuses in the year they’re paid, regardless of when they’re earned. Even for accrual-basis taxpayers, however, the 2½ month rule isn’t automatic. The bonuses can be deducted in the year they’re earned only if the employer’s bonus liability is fixed by the end of the year.

The all-events test

For accrual-basis taxpayers, the IRS determines when a liability (such as a bonus) has been incurred — and, therefore, is deductible — by applying the “all-events test.” Under this test, a liability is deductible when:

All events have occurred that establish the taxpayer’s liability,
The amount of the liability can be determined with reasonable accuracy, and
Economic performance has occurred.

Generally, the third requirement isn’t an issue; it’s satisfied when an employee performs the services required to earn a bonus. But the first two requirements can delay your tax deduction until the year of payment, depending on how your bonus plan is designed.

For example, many bonus plans require an employee to remain in the company’s employ on the payment date as a condition of receiving the bonus. Even if the amount of the bonus is fixed at the end of the tax year, and employees who leave the company before the payment date forfeit their bonuses, the all-events test isn’t satisfied until the payment date. Fortunately, it’s possible to accelerate deductions with a carefully designed bonus pool arrangement.

How a bonus pool works

In a 2011 ruling, the IRS said that employers may deduct bonuses in the year they’re earned — even if there’s a risk of forfeiture — as long as any forfeited bonuses are reallocated among the remaining employees in the bonus pool rather than retained by the employer. Under such a plan, an employer satisfies the all-events test because the aggregate bonus amount is fixed at the end of the year, even though amounts allocated to specific employees aren’t determined until the payment date.

Additional rules and limits apply to this strategy. To learn whether your current bonus plan allows you to take 2016 deductions for bonuses paid in early 2017, contact us. If you don’t qualify this year, we can also help you design a bonus plan for 2017 that will allow you to accelerate deductions next year.

The last month or so of the year offers accrual-basis taxpayers an opportunity to make some timely moves that might enable them to save money on their 2016 tax bill.

Record and recognize

The key to saving tax as an accrual-basis taxpayer is to properly record and recognize expenses that were incurred this year but won’t be paid until 2017. This will enable you to deduct those expenses on your 2016 federal tax return. Common examples of such expenses include:

Commissions, salaries and wages,
Payroll taxes,
Advertising,
Interest,
Utilities,
Insurance, and
Property taxes.

You can also accelerate deductions into 2016 without actually paying for the expenses in 2016 by charging them on a credit card. (This works for cash-basis taxpayers, too.) Accelerating deductible expenses into 2016 may be especially beneficial if tax rates go down for 2017, which could happen based on the outcome of the November election. Deductions save more tax when tax rates are higher.

Look at prepaid expenses

Also review all prepaid expense accounts and write off any items that have been used up before the end of the year. If you prepay insurance for a period of time beginning in 2016, you can expense the entire amount this year rather than spreading it between 2016 and 2017, as long as a proper method election is made. This is treated as a tax expense and thus won’t affect your internal financials.

Miscellaneous tax tips

Here are a few more year-end tax tips to consider:

Review your outstanding receivables and write off any receivables you can establish as uncollectible.
Pay interest on all shareholder loans to or from the company.
Update your corporate record book to record decisions and be better prepared for an audit.

Consult us for more details on how these and other year-end tax strategies may apply to your business.

Yeo & Yeo CPAs & Business Consultants is pleased to announce that Wendy Thompson, CPA, was recently honored with the most prestigious award bestowed by the firm, the Spirit of Yeo award. The Spirit of Yeo award recognizes an individual within the firm who exemplifies the attributes of the firm’s mission and core values.

Thompson is Yeo & Yeo’s training manager and was recently recognized for ten years of service to the firm. She researches and teaches all aspects of accounting, compilations, reviews, audits and nonprofit tax returns. She assists staff in nine Yeo & Yeo offices throughout Michigan with software used in these areas, and creates and updates best practices. She is a member of the firm’s Audit Services Group, the Non-Profit Services Group and the Compilation and Review team. Thompson also conducts training seminars for the Michigan Association of Certified Public Accountants (MICPA) and serves on the MICPA’s Nonprofit Task Force.

“Wendy always goes above and beyond. She is not just our trainer, she is also our go-to person with accounting questions. Her wealth of knowledge is truly incredible,” says one of her nominators. Another stated, “Wendy is a key part in the firm’s ability to provide quality work and services to our clients.”

Thompson is based in the firm’s Saginaw office. She holds a Bachelor of Science degree in accounting and Spanish from Northern Michigan University. She is a member of the Association for Talent Development.

In the award’s third year, 30 nominations were submitted by Yeo & Yeo employees. The firm’s Career Advocacy Team reviewed the submissions, and many individuals were nominated more than once.

“One of the best days of the year for me is the day I spend reading the nominations. It is awesome to read about all of the outstanding efforts these individuals in our firm have made,” said Thomas E. Hollerback, President & CEO, as he presented the award at the firm’s holiday celebration at Horizons Conference Center in Saginaw.

In the community, Thompson is a Boy Scout assistant Scoutmaster and a Girls Scout troop co-leader.

In addition to income tax, you must pay Social Security and Medicare taxes on earned income, such as salary and self-employment income. The 12.4% Social Security tax applies only up to the Social Security wage base of $118,500 for 2016. All earned income is subject to the 2.9% Medicare tax.

The taxes are split equally between the employee and the employer. But if you’re self-employed, you pay both the employee and employer portions of these taxes on your self-employment income.

Additional 0.9% Medicare tax

Another employment tax that higher-income taxpayers must be aware of is the additional 0.9% Medicare tax. It applies to FICA wages and net self-employment income exceeding $200,000 per year ($250,000 for married filing jointly and $125,000 for married filing separately).

If your wages or self-employment income varies significantly from year to year or you’re close to the threshold for triggering the additional Medicare tax, income timing strategies may help you avoid or minimize it. For example, as a self-employed taxpayer, you may have flexibility on when you purchase new equipment or invoice customers. If your self-employment income is from a part-time activity and you’re also an employee elsewhere, perhaps you can time with your employer when you receive a bonus.

Something else to consider in this situation is the withholding rules. Employers must withhold the additional Medicare tax beginning in the pay period when wages exceed $200,000 for the calendar year — without regard to an employee’s filing status or income from other sources. So your employer might not withhold the tax even though you are liable for it due to your self-employment income.

If you do owe the tax but your employer isn’t withholding it, consider filing a W-4 form to request additional income tax withholding, which can be used to cover the shortfall and avoid interest and penalties. Or you can make estimated tax payments.

Deductions for the self-employed

For the self-employed, the employer portion of employment taxes (6.2% for Social Security tax and 1.45% for Medicare tax) is deductible above the line. (No portion of the additional Medicare tax is deductible, because there’s no employer portion of that tax.)

As a self-employed taxpayer, you may benefit from other above-the-line deductions as well. You can deduct 100% of health insurance costs for yourself, your spouse and your dependents, up to your net self-employment income. You also can deduct contributions to a retirement plan and, if you’re eligible, an HSA for yourself. Above-the-line deductions are particularly valuable because they reduce your adjusted gross income (AGI) and modified AGI (MAGI), which are the triggers for certain additional taxes and the phaseouts of many tax breaks.

For more information on the ins and outs of employment taxes and tax breaks for the self-employed, please contact us.

The IRS has provided a 30-day extension of the due date for Affordable Care Act (ACA) information that must be reported to covered individuals and employees, from January 31, 2017, to March 2, 2017. This includes IRS Forms 1095-B (Health Coverage) and 1095-C (Employer-provided Health Insurance Offer and Coverage). This extension has been automatically granted, and no further extension of time to provide the Forms to covered individuals and employees will be available.

This extension does not impact the due dates for furnishing the information to the IRS, which remain February 28, 2017, if not filing electronically and March 31, 2017, if filing electronically. Because these reporting due dates were not changed, the normal rules for requesting an extension of time to file information returns, i.e., filing Form 8809, apply.

Yeo & Yeo helps simplify ACA compliance with Form 1095-C preparation services. Learn more.

If you have questions or need assistance, please contact Yeo & Yeo.

Now that Donald Trump has been elected President of the United States and Republicans have retained control of both chambers of Congress, an overhaul of the U.S. tax code next year is likely. President-elect Trump’s tax reform plan, released earlier this year, includes the following changes that would affect individuals:

Reducing the number of income tax brackets from seven to three, with rates on ordinary income of 12%, 25% and 33% (reducing rates for many taxpayers but resulting in a tax hike for certain single filers),
Aligning the 0%, 15% and 20% long-term capital gains and qualified dividends rates with the new brackets,
Eliminating the head of household filing status (which could cause rates to go up for some of these filers, who would have to file as singles),
Abolishing the net investment income tax,
Eliminating the personal exemption (but expanding child-related breaks),
More than doubling the standard deduction, to $15,000 for singles and $30,000 for married couples filing jointly,
Capping itemized deductions at $100,000 for single filers and $200,000 for joint filers,
Abolishing the alternative minimum tax, and
Abolishing the federal gift and estate tax, but disallowing the step-up in basis for estates worth more than $10 million.

The House Republicans’ plan is somewhat different. And because Republicans didn’t reach the 60 Senate members necessary to become filibuster-proof, they may need to compromise on some issues in order to get their legislation through the Senate. The bottom line is that exactly which proposals will make it into legislation and signed into law is uncertain, but major changes are just about a sure thing.

If it looks like you could be eligible for lower income tax rates next year, it may make sense to accelerate deductible expenses into 2016 (when they may be more valuable) and defer income to 2017 (when it might be subject to a lower tax rate). But if it looks like your rates could be higher next year, the opposite approach may be beneficial.

In either situation, there is some risk to these strategies, given the uncertainty as to exactly what tax law changes will be enacted. We can help you create the best year-end tax strategy based on how potential changes may affect your specific situation.

The election of Donald Trump as President of the United States could result in major tax law changes in 2017. Proposed changes spelled out in Trump’s tax reform plan released earlier this year that would affect businesses include:

Reducing the top corporate income tax rate from 35% to 15%,
Abolishing the corporate alternative minimum tax,
Allowing owners of flow-through entities to pay tax on business income at the proposed 15% corporate rate rather than their own individual income tax rate, although there seems to be ambiguity on the specifics of how this provision would work,
Eliminating the Section 199 deduction, also commonly referred to as the manufacturers’ deduction or the domestic production activities deduction, as well as most other business breaks — but, notably, not the research credit,
Allowing U.S. companies engaged in manufacturing to choose the full expensing of capital investment or the deductibility of interest paid, and
Enacting a deemed repatriation of currently deferred foreign profits at a 10% tax rate.

President-elect Trump’s tax plan is somewhat different from the House Republicans’ plan. With Republicans retaining control of both chambers of Congress, some sort of overhaul of the U.S. tax code is likely. That said, Republicans didn’t reach the 60 Senate members necessary to become filibuster-proof, which means they may need to compromise on some issues in order to get their legislation through the Senate.

So there’s still uncertainty as to which specific tax changes will ultimately make it into legislation and be signed into law.

It may make sense to accelerate deductible expenses into 2016 that might not be deductible in 2017 and to defer income to 2017, when it might be subject to a lower tax rate. But there is some risk to these strategies, given the uncertainty as to exactly what tax law changes will be enacted. Plus no single strategy is right for every business. Please contact us to develop the best year-end strategy for your business.

Affiliated Medical Billing (AMB), an affiliate of Yeo & Yeo CPAs & Business Consultants, is pleased to announce the promotion of Kati Krueger to vice president. Krueger will oversee business operations, talent management, continuous advancement, and training for AMB personnel.

“The healthcare industry is changing in dramatic ways. Expanding leadership will enable us to put additional emphasis on strategies that will drive growth and continuous advancement for AMB, and for our clients,” says Julia Lowe, president of AMB.

“Yeo & Yeo CPAs has been very successful in implementing LEAN Six Sigma methodologies in the audit and tax practices, a process we refer to as YeoLEAN. Under the leadership of Kati, AMB will employ the YeoLEAN concepts to be continuously proactive in the fast-changing healthcare industry and best serve the evolving needs of our clients,” adds Thomas Hollerback, president & CEO of Yeo & Yeo and its affiliates.

Krueger has an extensive background with AMB, having joined the company in 2002. She has over ten years’ experience in medical billing and revenue cycle management, helping several physicians and group practices throughout Michigan be efficient and compliant. Prior to her promotion, Krueger held the position as Billing Manager. Krueger also served as marketing manager for nearly five years, overseeing client relations and business development opportunities.

“I am excited to be such an instrumental part in the future advances at AMB, and to help clients maximize profitability and efficiency in this ever-changing industry. The advancements we are planning through YeoLEAN will further streamline processes for our clients,” says Krueger.

Krueger holds a Bachelor in Business Administration with a major in marketing from Saginaw Valley State University. She is a member of the Medical Group Management Association. In addition to her work at Yeo & Yeo, Krueger is an active volunteer in the Saginaw community.

November 29, 2016, is Giving Tuesday. Never heard of it? Known on social media as #GivingTuesday, the Tuesday after Thanksgiving has grown into one of the biggest fundraising drives for the Non-Profit industry.

Similar to Cyber Monday, it’s a day when charities encourage people to make year-end donations using their computers and mobile devices. Blackbaud, a software developer for Non-Profits, expects 2016 to be a record-breaking year. Here’s more about this event — and how you can deduct contributions to your favorite charitable organization on your 2016 tax return.

Charities Turn to the Internet

Blackbaud has tracked donations since the Giving Tuesday project launched in 2012. In its first year, Giving Tuesday generated $10.1 million in online donations in the United States. That total grew to $39.6 million last year, an increase of 52% over 2014. In general, online donations tend to be larger than traditional direct mail gifts.

A key reason for the growth in online donations is the prevalence of mobile devices. Blackbaud reports that on Giving Tuesday, 17% of U.S. online donations were made on mobile devices. That number is expected to be even higher in 2016.

Feeling Generous?

Overall, Non-Profits experience spikes in financial contributions and volunteer hours during the holiday season. Although you can’t deduct the time you spend volunteering, donations of cash and other assets may be deductible on your 2016 federal tax return if you follow the IRS rules.

First and foremost, you must itemize deductions to deduct charitable contributions. Additionally, your contributions must be made to “qualified” organizations. To see whether an organization qualifies, visit the IRS’s online search tool, Exempt Organizations Select Check. Giving money to an individual or a foreign organization generally isn’t deductible, except for donations made to certain qualifying Canadian Non-Profits.

For a charitable donation of cash, regardless of the amount, you must have a bank record or a written document from the charity. Bank records include canceled checks, bank or credit union statements, and credit card statements. These statements should show the name of the charity, the date and the amount paid. Credit card statements should also show the transaction posting date.

Clothing and household items donated to charity generally must be in good used condition or better. However, this requirement may be waived for deductions of clothing or household items of more than $500 if you include a qualified appraisal with the return. Household items include furniture, electronics, appliances and linens.

If a contribution entitles you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.

Remember to Document Higher Value Gifts

IRS substantiation rules vary depending on how much you’re claiming for each contribution:

Gifts of $250 or more (cash or property). You must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization (in other words, a receipt).

The acknowledgment must state whether the organization provided goods or services in exchange for the gift. If so, the nonprofit must provide a description and good faith estimate of the value of the goods or services. One document from an organization can satisfy both the written communication requirement for monetary gifts and the contemporaneous written acknowledgment requirement for all contributions of $250 or more.

Deductions related to noncash contributions worth more than $500. IRS Form 8283 must be filled out and attached to your return. For each item, you’re also required to maintain written records that include:

The approximate date the property was acquired and how you acquired it,
A description of the property,
The cost or other basis of the property,
The fair market value of the property at the time it was contributed, and
The method used in determining its fair market value.

Similar items of property are aggregated for purposes of the substantiation rules. The term “similar items of property” means property of the same generic category or type, such as clothing, jewelry, furniture, electronic equipment, household appliances or kitchenware.

The deduction for a motor vehicle, boat or airplane donated to charity is usually limited to the gross proceeds from its sale. This rule applies if the claimed value is more than $500. IRS Form 1098-C or a similar statement must be provided to you by the organization and attached to your tax return.

Deductions related to contributions of noncash property worth more than $5,000. Unless you’re giving publicly traded securities, you must obtain a qualified appraisal. (The threshold is $10,000 for nonpublicly traded securities.) If you claim a deduction for a contribution of noncash property worth more than $500,000, you must attach the qualified appraisal to your return.

There’s Still Time to Donate

Contributions are deductible in the tax year they’re made, but many people put off donating until the last minute. Fortunately, you have until December 31 to donate for the 2016 tax year. Donations made online, by phone or via social media that are charged to a credit card on or before midnight on December 31 count for 2016 — even if the bill isn’t paid until 2017. Mailed checks also count for 2016 as long as they’re postmarked no later than December 31.

If you plan to deduct a sizable charitable contribution on your 2016 tax return, consult with your tax advisor before year end to ensure you’re following all the rules.

Yeo & Yeo is pleased to announce that Amy R. Buben, CPA, CFE, and Eric J. Sowatsky, CPA, CGMA, NSSA, have been promoted to the position of principal.

Thomas E. Hollerback, president and CEO, says, “Our two new principals are talented professionals who are committed to helping Yeo & Yeo’s clients succeed. They are strong leaders in serving clients in their respective industries with energy and enthusiasm. We are proud to welcome Amy and Eric to the principal/ownership group.”

Buben leads the firm’s Manufacturing Services Group and is a member of the Tax Services Group. Her areas of expertise include business consulting, financial reporting and tax issues with a strong focus on manufacturers and auto dealers, as well as the retail and wholesale sectors. Buben joined Yeo & Yeo in 2006 and has more than 20 years of experience working with manufacturers. She is also a Certified Fraud Examiner highly trained in the prevention and examination of fraudulent financial activity. She serves in the management advisory services department of the Saginaw office.

Buben is a member of the Michigan Manufacturers Association and treasurer of the Great Lakes Bay Manufacturers Association. She is a member of the Saginaw County Chamber of Commerce Ambassador Alumni, a 1000 Leaders program participant, and a graduate of the Leadership Saginaw Class of 2011. In our community, Buben is vice chair of Women in Leadership Great Lakes Bay, and a volunteer and past board member for Junior Achievement of North Central Michigan. In 2014, the Michigan Association of Certified Public Accountants recognized Buben with its Women to Watch – Emerging Leader award.

Sowatsky leads the firm’s Agribusiness Services Group and is a member of the Tax Services Group. He assists farm and agribusiness operations with business and tax planning issues, and succession planning. He is a Certified Grain Accountant with expertise in proper accounting procedures for grain elevators. He conducts collateral field exams for lending institutions providing review of collateral for the agribusiness, manufacturing and automotive industries. Sowatsky is also a National Social Security Advisor, certified in counseling clients on optimal strategies for claiming social security benefits. He joined Yeo & Yeo in 2004. He serves in the management advisory services department of the Saginaw office.

Sowatsky is a member of the Michigan Agribusiness Association’s Grain Committee and the Farm Financial Standards Council. He is a presenter at Michigan Agribusiness Association conferences. He is past president of the Great Lakes Bay Economic Club, a Leadership Bay County Alumni and past treasurer of the Rotary Club – Saginaw Sunrise. In the community, Sowatsky is treasurer of Bethlehem Lutheran Church and chair of Bethlehem Lutheran School’s Athletics Advisory Committee.

The U.S. Department of Labor’s new rule on overtime exemptions set to go into effect December 1, 2016, has been blocked by a U.S. District Judge who agreed with arguments made by 21 states and several business organizations, including the U.S. Chamber of Commerce. This nationwide injunction stops the rule that would have affected over four million workers who may have qualified for overtime pay.

Under prior ruling, workers who earned more than $23,660 per year, or $455 per week, were exempt from overtime if they performed managerial or professional duties. Under the new rule, the salary threshold was to be increased to $47,476 per year, or $913 per week.

How does this judgment impact employers?

This ruling is likely to remain in effect for the remainder of the Obama administration, yet it is unknown what actions the Trump administration will take.

Employers who have already made changes in employee salaries in order to comply will need to make the difficult decision to keep the changes in place or revert, keeping in mind that further changes may take place in the coming months under the new administration. Compliance steps that should not be changed back include updated personnel policies that may be more specific about cell phone use, travel time, etc., recordkeeping compliance updates, and confirmation that exempt employees met duty and salary requirements.
For those who have not implemented any changes, it may make sense to wait to make any changes until this is sorted out.

If you have questions or need assistance, please contact Yeo & Yeo.