$11 Million Estate Tax Exemption Going Away? Act Now

$11 Million Estate Tax Exemption Going Away? Act Now

It might not be tomorrow, but the sunset on the historically high estate tax exemptions is coming – maybe sooner than you expect, so get prepared.

Owning a construction company comes with daily challenges and in the current economy – mounting financial pressures. When you’re preoccupied with the next big project on your growing to-do list, it’s easy to forget about long-term financial planning. It’s especially easy to delay making decisions about estate tax, as it’s likely not on the top of your radar. But the reality is that while the Tax Cuts and Jobs Act raised the gift and estate tax exemption to an unprecedented $11.18 million per person in 2018, (more than doubling the limit under the old tax law) the current administration aims to significantly reduce the exemption ahead of its scheduled expiration in 2025. Exactly when the reduction will go into effect is up for debate, but most financial experts agree the change will be here sooner rather than later.

The current Federal rule states that any one person can transfer up to $11.7 million, either in the form of gifts or through inheritance — without having that amount be subject to the current 40 percent Federal gift and estate tax. On September 13, 2021, the House Ways and Means Committee released a proposal for tax changes that would drop the federal estate tax exemption amount to $5 million as of January 1, 2022 – but change could come even sooner. The exemption amount would be approximately $6,020,000 starting in 2022. Read the full legislative proposal, here.  New York State also has an estate tax with a current exemption of $5,930,000, however NYS does not have a gift tax. For NYS estate tax purposes gifts made within three years of death are included in an individual’s estate, while gifts made more than three years before death are not.

I have built my career assisting many clients with the transition of family wealth from one generation to the next in an orderly way with the least tax impact. I also advise my clients concerning the liquidity for estate tax payments. My goal? To minimize the administrative burdens for all the survivors and to help in transferring family businesses in an orderly way during an often stressful time. Some have cited concerns about the amount they are able to transfer and wonder if it’s worth it to act now. Gifts of any amount up to $11,700,000 made outright or through trusts before the date of the proposed bill’s enactment can still reap great rewards. For example:

  • While outright gifts to individuals remove assets from your estate, you are also relieved from the income tax responsibility associated with the gifted assets. Gifts to certain trusts allow you to leverage your gift by remaining liable for the income taxes on the assets gifted to a grantor trust – so you continue to whittle down your taxable estate by paying the income taxes on the trust’s earnings even though you don’t receive the trust earnings.
  • Grantor retained annuity trusts (GRATs) may still be used to sell assets tax-free to a trust but under proposed tax changes, the window may be closing on this technique. With a GRAT, at the end of the trust term, the remaining appreciation is passed out to a beneficiary without using any portion of your lifetime exemption.
  • Between the potential decrease in the gift and estate tax exemption and proposed legislation targeted toward eliminating grantor trusts, now is a critical time to consider life insurance and irrevocable life insurance trusts (ILITS) as part of your estate plan. While gifts that are made to an ILIT to fund the payment of life insurance premiums may be applied toward your gift and estate tax exemption, when the policy is paid out at death the life insurance proceeds may be fully excluded from your estate.

So, what kind of savings are we talking about?

Below we will use an example derived from digital legal analysis site Lexology to illustrate how much money you and your family can save if you plan accordingly and act now.

Let’s assume that in the year of your death, the estate tax rate is 50%. If you were successful this month in shielding an extra $5,700,000 (even if those assets never appreciate over the rest of your life), you and your family avoid almost $3,000,000 in estate taxes (and likely much more considering the appreciating values of such assets and accumulated related income). The takeaway? If you can afford to make gifts to a trust that benefits you and your family, this may be the best time to commit.

While the bill is not yet law, and still needs to be approved by Congress and the President, it’s best to act now so you will be prepared for any future changes. Questions or concerns about the future of your financial planning? Don’t hesitate to reach out to our dedicated RBT team that specializes in working with construction clients, or you can reach out directly to me at irahilly@rbtcpas.com or by phone, 845.205.7986 Ext. 263.

Sources: Ways and Means, Forbes, NBC, Lexology

Why You Should See the Value in Digital Vision Care

Why You Should See the Value in Digital Vision Care

Chances are, your healthcare team has launched a telehealth campaign to stay connected to patients throughout the ongoing COVID-19 pandemic.

One area that’s lacking and has huge room for growth? Virtual eye care. Telemedicine in optometry can expand patient access to care, improve coordination of care, and enhance communication among all health care practitioners involved in the care of a patient. Despite vision care benefits being underutilized, Americans see the value. According to the CDC, about 93 million adults in the United States are at risk for vision loss. The COVID-19 pandemic may cause that number to increase because many Americans are delaying or going without care to avoid the risk of exposure to the virus. Visits to the eye doctor have dropped by an estimated 80% during the COVID-19 pandemic.

By increasing online access to eye doctors as we have with other types of primary care, benefit utilization will grow as will patient comfort.

Telemedicine can diagnose eye diseases like glaucoma and diabetic retinopathy. Eye doctors may also provide other remote non-emergency services, like diagnosing and treating eye infections, prescribing or changing medicines, or rescheduling surgery. Usually, with only traditional vision plans at their disposal, most Americans can’t afford to make routine eye exams and new glasses part of their family’s yearly health routine. But for the vast majority of American families – and school-age children in particular – the pandemic meant a huge increase in screen time, which means eye exam access will become more crucial than ever before. Experts foresee this as signaling eye health trouble ahead and an influx of patient care in the world of optometry.

Alina Dumitrescu, MD, a clinical associate professor of pediatrics, ophthalmology, and visual science at the University of Iowa Hospitals and Clinics, said virtual schooling during the pandemic has added, on average, an additional 2 to 3 hours of screen time a day. Dr. Neeraj K. Singh, BSOptom, MPhil, PGD (Epidemiol), said the most common problems associated with increased screen time are eye strain, dry eye diseases, and myopia progression. Experts anticipate myopia (nearsightedness) will affect nearly a third of Americans by 2050.

So, how can establishing digital eye care benefit your medical organization?

This September, The Congressional House Ways and Means Committee unveiled and began marking up legislative proposals, as part of the committee’s jurisdiction under the budget reconciliation instructions, that would expand Medicare coverage to add dentalvision, and hearing benefits. Specifically, the committee’s proposal would create coverage for vision services under Medicare Part B beginning October 1, 2022, which would include routine eye examinations. Why not get ahead of the influx of patient appointment requests, by implementing telehealth options now? If your organization opts to see the future in telehealth optometry, you will have the support of the American Optometric Association (AOA). AOA officially announced their support for telemedicine in optometry to access high-value, high-quality eye, health, and vision care back in 2020.

The explosion in telehealth services and the continual growth of e-commerce both point to long-lasting shifts for American workers and families.

As millions transition to remote work and a growing number of students opt for remote education, more flexible and innovative vision benefits will help boost benefit utilization and revenue generation. While telemedicine in optometry should not replace entire categories of care available in-person, experts agree that it is an industry game-changer. Questions? Contact RBT’s team of healthcare experts today to set your organization up for financial success.

Sources: CDC, Benefit News, AOA, Ophthalmology Advisor

Want to Reduce Property Taxes and Lower Costs? Read This!

Want to Reduce Property Taxes and Lower Costs? Read This!

With many major revenue sources in decline, there is a heightened interest in exploring innovative ways to control local government and school district costs by eliminating duplicate services. If your community hasn’t yet considered county-wide shared services, what are you waiting for?

Although the concepts of shared services and functional consolidation are not new, they are receiving greater attention in the media and from taxpayers and policy leaders at all levels of government. Just last week, State Comptroller Thomas P. DiNapoli announced 30 local governments that ended 2020 in some form of fiscal stress. Shared services present a viable option for reducing costs or slowing growth in spending without necessarily impacting service quality for local governments, including counties, cities, towns and villages, school districts, and fire districts. Below we will provide tips to local officials interested in exploring greater degrees of cooperation with other local governments.

What is CWSSI?

The county-wide shared services initiative, or CWSSI, expands on New York State’s ongoing commitment to reduce property taxes and modernize local government services by fostering new shared services and enhancing the existing collaborations already in place. The Department of State offers several comprehensive programs to incentivize and aid local government efficiencies. The CWSSI is extended from December 31, 2021, through December 31, 2024, so that each county CEO outside of New York City is required to continue to convene a Panel to:

  • Revise or update a previously approved CWSSI Plan or developing a new Plan.
  • Provide information the Secretary of State might request under the law.

Are there other 2021 CWSSI updates to be aware of?

The short answer is yes. The 2021 Amendments to Section 239-bb also made the following changes to add flexibility for State Matching Funds:

  • Counties can choose one of two statutory match years for each new action implemented. Each county and its participating local government entities may be eligible for State Matching Funds from each new action that generate net savings from implementation during the statutory match years of either: (i) January 1st through December 31st of the year immediately following Plan approval, or (ii) July 1st of the year immediately following approval and transmission of a Plan through June 30th of the subsequent year.
  • Counties will be able to submit one Match Application per year and must choose a match year for each action in the Application. The Match Application will include sections for actions implemented during both the January 1st through December 31st and July 1st through June 30th period. Counties may choose to implement an action for the first time during either period, notwithstanding the implementation period designated in an approved and submitted Plan.
  • Actions commencing before the beginning of a selected period are not eligible for State Matching Funds for that period.

Should I consult with residents?

Yes! In fact, it’s a requirement. The CEO, who is the Panel Chair, must hold a minimum of three public hearings to solicit input from citizens, civic, business, labor, and community leaders. Any individuals or groups who will be impacted and can directly or indirectly influence the implementation of the project will have valuable input. Follow these steps to conduct a fruitful shared services survey:

  • Identify stakeholders
  • Develop a focused mission statement and goals
  • Identify viable options for accomplishing goals
  • Select realistic programs
  • Study options thoroughly and weigh all options
  • Deal directly with problems

Ultimately, considering shared services is an investment in your community’s future at a time when it will help to fuel the longer economic recovery from the COVID-19 pandemic. To give you an idea of the savings potential that was submitted in 2018, 23 county-wide shared services plans generated an estimated first year savings of $49 million. Of the 2018 highest savings highlights, three Hudson Valley counties grabbed a spot in the top five, including Westchester ($7.5M), Orange ($5.0M), and Rockland ($4.7M). We hope the information you’ve read has helped to reinforce the importance of cooperation and consolidation in achieving local cost efficiencies, especially during these times of fiscal uncertainty. The Office of the State Comptroller (OSC) can provide specific training and web-based data to assist local officials in exploring opportunities for their communities. As always, our trusted RBT team members are standing by ready to assist you with any personalized questions, or to set up a consultation.

Sources: OSC, NY.gov

Making the Most of your COVID-19 Relief Aid

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021. The ARPA appropriated approximately $39.6 billion for the Higher Education Emergency Relief Fund (HEERF) and represents the third stream of funding granted for HEERF to prevent, prepare for, and respond to coronavirus. Taken together, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), and the ARPA represent HEERF I, HEERF II, and HEERF III, respectively. Following the spring 2021 announcement, Senate Majority Leader Chuck Schumer released a breakdown of funds from the American Rescue Plan Act going to New York colleges and universities. Public, private, and proprietary higher education institutions within the state stand to receive roughly $2.6 billion, Schumer said.

First things first: you need to do your homework.

There is a lot to unpack within this funding, and it’s extensive. We hope your staff has had adequate time to digest all of the information made available by the U.S. Department of Education. As many schools are currently in the process of distributing and spending HEERF III money, our goal is to provide a high-level overview of several important aspects of HEERF III so your institution can make the most of available funding.

This funding is not one size fits all.

Megan Schneider, senior director of government affairs at the National Association of College and University Business Officers, noted that every college serves a different population of students with different needs. “The Education Department really wanted schools to have flexibility because no one knows your students as well as you do,” Schneider said. Schneider also said that, given the uncertainty of the pandemic, she understands why some colleges are inclined to want to preserve as much aid as they can. However, she added that her association has been advising colleges that they should get the grants to students “as quickly as possible.” HEERF III is structured like the HEERF II programs under the CRRSAA, with certain important differences that students and educators should be aware of. Unlike HEERF I and II, a portion of HEERF III institutional funds must be spent on two activities:

  1. Implement COVID health and safety measures
  2. Conduct direct student outreach regarding opportunities for further federal financial aid

Congress imposed these broad mandates in the American Rescue Plan Act and left ED to define them more thoroughly. ED’s new guidance better defined the activities associated with these stipulations but did not stipulate the exact amount of HEERF III that needs to be spent on them.

HEERF payroll uses are further defined in question 25 of the HEERF III FAQ. Institutions can use HEERF institutional aid to pay for new or repurposed staff as long as the cost is associated with COVID and occurred after 3/13/2020. Student employees are also eligible, including internships and job training. Some examples include:

  1. New staff such as teaching assistants, contact tracers, more instructors to lower class size, and IT workers
  2. Staff unable to work or who lost wages due to COVID, potentially payable retroactively (e.g., cafeteria, dorm, and clerical workers)
  3. Overtime pay for custodial workers, staff training, etc.

HEERF III grant money is not taxable.

These grants have been provided to students due to an event related to the COVID-19 and are therefore not included in a student’s gross income. For more information, please view the IRS bulletin: Emergency aid granted to students due to COVID is not taxable.

Ultimately, some colleges have significant numbers of students from the lowest income brackets, while others serve more students of various income levels so the way this aid is distributed will vary from school to school.

Be sure to thoroughly review the FAQs page which is intended to describe the features and allowable uses of grants received under the HEERF III programs, as it is sometimes updated with additional information. Still have financial questions or concerns about putting this funding to good use? Contact our dedicated team of RBT professionals today.

Sources: EAB, Senate.gov, IRS, EDNC, EdSource, Ed.gov

$11 Million Estate Tax Exemption Going Away? Act Now

$11 Million Estate Tax Exemption Going Away? Act Now

It might not be tomorrow, but the sunset on the historically high estate tax exemptions is coming – maybe sooner than you expect, so get prepared.

Owning a manufacturing company comes with daily challenges and in the current economy – mounting financial pressures. As many cheaper and lower-paying manufacturing jobs continue to relocate overseas, New York has seen a corresponding rise in technical manufacturing, including computer products, mobile devices, video games, 3-D printing, and general software engineering tools. Despite the rising global competition, it’s impressive to consider that manufacturing ranks as the fifth leading industry in the state, contributing $61 billion to New York’s GDP in 2020. When you’re preoccupied with the next big project on your growing to-do list (while juggling material shortages amidst the ongoing pandemic), it’s easy to forget about long-term financial planning. It’s especially easy to delay making decisions about estate tax, as it’s likely not on the top of your radar. But the reality is that while the Tax Cuts and Jobs Act raised the gift and estate tax exemption to an unprecedented $11.18 million per person in 2018, (more than doubling the limit under the old tax law) the current administration aims to significantly reduce the exemption ahead of its scheduled expiration in 2025. Exactly when the reduction will go into effect is up for debate, but most financial experts agree the change will be here sooner rather than later.

The current Federal rule states that any one person can transfer up to $11.7 million, either in the form of gifts or through inheritance — without having that amount be subject to the current 40 percent Federal gift and estate tax. On September 13, 2021, the House Ways and Means Committee released a proposal for tax changes that would drop the federal estate tax exemption amount to $5 million as of January 1, 2022 – but change could come even sooner. The exemption amount would be approximately $6,020,000 starting in 2022. Read the full legislative proposal, here.  New York State also has an estate tax with a current exemption of $5,930,000, however NYS does not have a gift tax. For NYS estate tax purposes gifts made within three years of death are included in an individual’s estate, while gifts made more than three years before death are not.

I have built my career assisting many clients with the transition of family wealth from one generation to the next in an orderly way with the least tax impact. I also advise my clients concerning the liquidity for estate tax payments. My goal? To minimize the administrative burdens for all the survivors and to help in transferring family businesses in an orderly way during an often stressful time. Some have cited concerns about the amount they are able to transfer and wonder if it’s worth it to act now. Gifts of any amount up to $11,700,000 made outright or through trusts before the date of the proposed bill’s enactment can still reap great rewards. For example:

  • While outright gifts to individuals remove assets from your estate, you are also relieved from the income tax responsibility associated with the gifted assets. Gifts to certain trusts allow you to leverage your gift by remaining liable for the income taxes on the assets gifted to a grantor trust – so you continue to whittle down your taxable estate by paying the income taxes on the trust’s earnings even though you don’t receive the trust earnings.
  • Grantor retained annuity trusts (GRATs) may still be used to sell assets tax-free to a trust but under proposed tax changes, the window may be closing on this technique. With a GRAT, at the end of the trust term, the remaining appreciation is passed out to a beneficiary without using any portion of your lifetime exemption.
  • Between the potential decrease in the gift and estate tax exemption and proposed legislation targeted toward eliminating grantor trusts, now is a critical time to consider life insurance and irrevocable life insurance trusts (ILITS) as part of your estate plan. While gifts that are made to an ILIT to fund the payment of life insurance premiums may be applied toward your gift and estate tax exemption, when the policy is paid out at death the life insurance proceeds may be fully excluded from your estate.

So, what kind of savings are we talking about?

Below we will use an example derived from digital legal analysis site Lexology to illustrate how much money you and your family can save if you plan accordingly and act now.

Let’s assume that in the year of your death, the estate tax rate is 50%. If you were successful this month in shielding an extra $5,700,000 (even if those assets never appreciate over the rest of your life), you and your family avoid almost $3,000,000 in estate taxes (and likely much more considering the appreciating values of such assets and accumulated related income). The takeaway? If you can afford to make gifts to a trust that benefits you and your family, this may be the best time to commit.

While the bill is not yet law, and still needs to be approved by Congress and the President, it’s best to act now so you will be prepared for any future changes. Questions or concerns about the future of your financial planning? Don’t hesitate to reach out to our dedicated RBT team that specializes in working with manufacturing clients, or you can reach out directly to me at irahilly@rbtcpas.com or by phone, 845.205.7986 ext. 263.

Sources: Ways and Means, Forbes, NBC, Lexology, Investopedia

U.S. Treasury Extends ARPA Reporting Deadline

The U.S. Department of Treasury has extended the reporting deadline for the Project & Expenditures Report for all recipients of the Coronavirus State and Local Fiscal Recovery Fund (SLFRF). According to NYGFOA and several other local government legislative advocacy groups across the country, the U.S. Department of Treasury sent an email out on Thursday, September 30, 2021 notifying states of the deadline change. Here is a link to the official addendum. According to the email correspondence, the deadline extension comes as a result of the feedback and comments gathered from recipients during that process. Please note:

  • States, Metropolitan Cities, Counties, Territories, and Tribal Governments will now report on January 31, 2022, instead of October 31, 2021 and will cover the period between award date and December 31, 2021.
  • The first reporting deadline for Non-Entitlement Units (NEUs) will be April 30, 2022, instead of October 31, 2021 and will cover the period between award date and March 31, 2022.

States have been sent a draft letter regarding the change by the Treasury which can be used to notify their NEUs. As an NEU you should continue working with your state or territory to take action on your allocated distribution and provide the necessary contact information to set up your account in Treasury’s Portal. In the event you decide to decline and request the transfer of funds, you will need to submit the Treasury form provided by your state or territory. Further instructions will be provided at a later date, including updates to existing guidance as well as a user guide to assist recipients to gather and submit the information through Treasury’s Portal. Please visit Treasury’s website at www.Treasury.gov/SLFRPReporting for the latest information. As always, if you have specific questions and would like to consult with one of our specialized RBT Government team members, contact us today.

Sources: U.S. Department of Treasury, NYGFOA

Plan Breakdown: Qualified VS Non-Qualified, and Why it Matters

Even in a pre-pandemic economy, attracting and retaining top talent was a challenge across industry lines.

A recent Glassdoor survey revealed that four in five employees would prefer new or additional benefits over a pay raise. More specifically, 89 percent of younger employees, those between 18 and 34, would prefer benefits to more money in their paycheck.

While increased health-care insurance was the most valued benefit (40 percent), retirement plan and/or pension ranked fifth, at 31 percent. Flexible scheduling — which has become the norm for many in the current work from home environment — followed retirement savings, at 30 percent. So let’s brush up on The Employee Retirement Income Security Act, and have a brief refresher on the differences between qualified verses non-qualified plans, to make sure you are offering your employees competitive retirement and benefit plans to keep them satisfied.

What is ERISA?

The Employee Retirement Income Security Act (ERISA) is a federal law that was enacted in 1974 to set minimum standards for most voluntarily established pension and health plans. It was established because at the time, state and federal laws didn’t adequately protect employee benefit plan participants and beneficiaries. It requires plan sponsors to provide plan information to participants. It establishes conduct standards for plan managers and other fiduciaries as well as enforcement provisions to ensure that plan funds are protected and that qualifying participants receive their benefits, even if a company goes bankrupt.

Who does ERISA protect?

ERISA covers retirement plans and welfare benefit plans. In FY 2013, ERISA encompassed roughly 684,000 retirement plans, 2.4 million health plans, and 2.4 million additional welfare benefit plans. These plans cover about 141 million workers and beneficiaries and include more than $7.6 trillion in assets. About 54 percent of America’s workers earn retirement benefits on the job, and 59 percent earn health benefits.

Qualified vs Non-Qualified Plans

So, what’s the difference between qualified and non-qualified plans? Qualified plans qualify for certain tax benefits and government protection. Nonqualified plans do not meet all ERISA stipulations.

Qualified plans are the most rigid, as they require a number of guidelines to qualify — including vesting, benefit accrual, and funding restrictions. A few of the most well-known qualified retirement plans, include:

  • 401(k) profit-sharing plans: a retirement savings plan offered by many American employers that has tax advantages to the saver. It is named after a section of the U.S. Internal Revenue Code.
  • 403(b) plans: a retirement account for certain employees of public schools and tax-exempt organizations. Participants include teachers, school administrators, professors, government employees, nurses, doctors, and librarians.
  • Keogh (HR-10) plans:  tax-deferred pension plans—either defined-benefit or defined-contribution—used for retirement purposes by either self-employed individuals or unincorporated businesses, while independent contractors cannot use a Keogh plan.

Non-qualified plans leave a more flexible variety of possibilities for employees and are generally used to provide high-paid executives with an additional retirement savings option. However, employees pay taxes on funds before contributing to the plan in non-qualified plans, and typically, an employer is unable to claim these contributions as a tax deduction. Additionally, according to Investopedia, a non-qualified employee benefit plan has no limit on contributions from the employer and requires minimal reporting and filing on the employer’s part, and are usually less money to create than qualified plans. There are four major types of nonqualified plans:

  • Deferred-compensation plans: a written agreement between an employer and an employee in which part of the employee’s compensation is withheld by the company, invested, and then given to the employee at some point in the future.
  • Executive bonus plans: provide supplemental benefits to select executives and employees. Most commonly, employees under such plans receive a life insurance policy with employer-paid premiums.
  • Split-dollar life insurance plans: utilized when the employer purchases a life insurance policy for the employee, and they split the ownership of the policy.
  • Group carve-out plans: utilized in order for the employer to carve out the group life insurance of a key executive and replaces it with an individual policy. It allows the employee to avoid excess costs associated with a group plan.

Whether you offer a diverse range of options for your team, or this refresher has given you some inspiration about changes your administration needs to make, it’s always a good idea to reevaluate what your company offers. Staying competitive as we approach 2022 means staying innovative, implementing improvements, and keeping your team motivated and happy to stay successful and reach new goals. If you have any questions about updating your policies, please reach out to our team of dedicated professionals.

Sources: DOL, Investopedia, CFI, Glassdoor

Must Share Info: Resuming Student Loans

January might feel far away, but it will be here before you know it (along with freezing temperatures and lots and lots of snow, sorry New Yorkers, you know the drill). Like winterizing your home or prepping for the change in seasons, millions of student loan borrowers have another addition to tack onto their winter to-do list before we hit the New Year. Overall, there are 2.7 million student loan borrowers in New York, with debt totaling $99.8 billion. New York borrowers carry an average balance of $35,638 each — though that’s 3% lower than the average borrower in the U.S. ($36,689). Below, you’ll find extremely important and time-sensitive student loan repayment reactivation information to pass along to student loan borrowers in your life before time runs out.

Student loan payments, interest accruals, and collections of defaulted federal student loans have all been on hold since the start of the pandemic — first thanks to the CARES Act, then due to extensions from former President Donald Trump, former Education Secretary Betsy DeVos, and President Biden. This August, the U.S. Department of Education announced a final extension of the student loan payment pause until Jan. 31, 2022.

So, how can borrowers prepare for repayments to resume?

Below are three steps to pass along to borrowers, so they can ensure they’re prepared for payments to resume:

  1. Update your contact information in your profile on your loan servicer’s website and in your StudentAid.gov profile.
  2. Check out Loan Simulator to find a repayment plan that meets your needs and goals or to decide whether to consolidate.
  3. Consider applying for an income-driven repayment (IDR) plan. An IDR plan can make your payments more affordable, depending on your income and family size.

A further note on repayment strategy – now is a good time for borrowers to reassess their future plans. Encourage borrowers to make sure they can afford the payments when they resume, and if not, dedicate time now to determining what repayment options may be available instead of waiting until January. It’s best to have a list of financial advisers, or certified student loan experts readily available to offer borrowers resources to provide assistance and direction. Also, make sure they know that once the payment suspension ends, they will receive a billing statement or other notice at least 21 days before the payment is due. Encourage them to contact their loan servicer online or by phone to find out what the payment amount will be when payments restart. Loan servicers are the most reliable source for official, up-to-date information about loans. Another helpful tip? The U.S. Department of Education wants to help borrowers learn how to avoid scams. Student loan borrowers should never accept unexpected offers of financial aid or help (such as a “pandemic grant” or “Biden loan forgiveness”) without checking with their school to see if the offer is legit.

The pandemic caused economic shockwaves across the nation, regardless of economic status, everyone surely felt some level of impact.

From family members losing jobs to falling ill, many entered saving mode due to extreme stress and uncertain financial times. Be sure to pass along compassion to borrowers you connect with and direct them to resources. The Federal Student Aid site provides the latest updates about coronavirus student loan relief and its impact on students, borrowers, and parents. For more information on student loan forgiveness legislation, visit the U.S. Department of Education’s website. Of course, our dedicated RBT professional team is also here to provide personalized guidance.

Sources: U.S. Department of Education, Student Loan Hero

Is Your Company Plan Up to DOL Speed?

Since COVID-19 entered our lives and disrupted our normal protocols, reassessing workplace safety has been on every employer’s mind, especially within hands-on industries like construction work. Below we’ll review a timeline of important statewide legal action that impacts you, your employees, and the future of your company.

In response to the pandemic, the New York Health and Essential Rights Act (NY HERO Act) was signed into law on May 5, 2021.

The HERO Act mandates extensive new workplace health and safety protections. The goal? To protect employees against exposure and disease during a future airborne infectious disease outbreak.

On September 6, 2021, Governor Kathy Hochul announced the designation of COVID-19 as an airborne infectious disease under the HERO Act.

This designation requires all employers to implement workplace safety plans. Under this new law, the New York State Department of Labor (NYS DOL), in consultation with the NYS Department of Health, has developed a new Airborne Infectious Disease Exposure Prevention Standard, a Model Airborne Infectious Disease Exposure Prevention Plan, and various industry-specific model plans for the prevention of airborne infectious disease.

On September 23, 2021, the DOL updated its Model Airborne Infectious Disease Exposure Prevention Plan.

The most notable change to the Model Plan is the loosening of face-covering requirements for employees in workplaces where all individuals on the premises are vaccinated. The Model Plan states that for workplaces where all individuals on the premises are fully vaccinated, appropriate face coverings are recommended, but not required, consistent with State Department of Health and the Centers for Disease Control and Prevention applicable guidance, as of September 16, 2021. The model plan also revised the language on physical distancing to read, “Physical distancing will be used, to the extent feasible, as advised by guidance from State Department of Health or the Centers for Disease Control and Prevention, as applicable.”

While you likely already have your plan established and distributed (or face hefty financial fines) employers should continue to review/update safety plans, and conduct employee training.

It’s also important to note that a second section of the HERO Act, effective November 1, 2021, allows employees to form a joint labor-management workplace safety committee.

The committee must be comprised of both employer and employee designees, with at least two-thirds nonsupervisory employees who are chosen by nonsupervisory employees. The Act authorizes committees to:

  • Raise health and safety concerns, to which employers must respond
  • Review health and safety policies enacted in response to laws, executive orders, or guidance
  • Participate in government workplace site visits
  • Review employer-filed reports related to workplace health and safety
  • Meet quarterly during working hours for up to two hours
  • Allow committee members to attend a training, not to exceed four hours, on occupational health and safety and the function of worker safety committees

THE DOL will likely publish future guidance on how to best communicate this information to employees. The DOL’s HERO Act web page provides links to model safety plans and other construction site-specific information. As a best practice, we advise all union employers to preemptively check their collective bargaining agreements to see if the safety committee requirements conflict, as the terms of the committees will most likely be subject to bargaining.

Thinking of not complying? Think again.

Employers may be subject to daily penalties between $50.00 and $10,000.00 for failure to comply with the NY HERO Act requirements. In summary, change and updates are the norm in the current climate we find ourselves in. Employers must be aware of changing rules and regulations as they pop up in real time. Additionally, as supply chain delays and material shortages persist through the fall and winter months, it’s a good idea to obtain and properly store personal protective equipment and other exposure controls in preparation for future infectious disease outbreaks. Don’t hesitate to act. This plan can be implemented with expert guidance. If you have question, please feel free to contact our dedicated RBT team who specialize in assisting construction client needs.

NYS Pass-Through Entity Tax

NYS Pass-Through Entity Tax

New York State individual owners of partnerships and S corporations have an opportunity to benefit from valuable tax deductions.

The NYS Pass-Through Entity Tax (PTET) is effective for tax years beginning on or after January 1, 2021. Given the high real property taxes and high personal income tax rates in New York State, many individual taxpayers have felt the effects of the state and local tax deduction limitation that was part of the Tax Cuts and Jobs Act (TCJA) of 2017. NY’s PTET was put into place to hopefully provide some NY business owners with a new opportunity for federal tax savings around this current limitation.

The PTET works by shifting the burden of state income tax payments related to income passed through from partnerships and/or S corporations.

Rather than the individual shareholders/partners being responsible for paying the tax, the pass-through entities (PTEs) will pay the tax. Partnerships and S corporations that pay the PTET are allowed a tax deduction against their ordinary business income without regard to the $10,000 SALT limitation. And if you haven’t been itemizing your deductions on your personal tax return because the standard deduction has been greater than your otherwise deductible expenses, the PTET provides for additional deductions that weren’t available to you previously.

Each year, NY partnerships and/or S corporations must make an annual election to participate in this program. The election is made online with the New York Department of Taxation and Finance through a business’ online services account. Once made, the entity is responsible for filing and paying all required tax returns and payments for that year. The election may be revoked up until March 15 of the year it is made; then, it is irrevocable.

Elections cannot be made by tax professionals, only by authorized individuals (partner, shareholder, etc.) of the business. The election must be made by March 15th.

The calculations differ slightly based on entity type and residency status. S Corporations with all NY resident shareholders will pay the PTET on 100% of the entity’s NY taxable income while S Corporations with any nonresident shareholders will pay the PTET based only on the entity’s NY sourced taxable income. Partnerships will pay the PTET based on all allocable taxable income for residents and only NY sourced taxable income for non-residents. The tax rate ranges from 6.85%, for PTE taxable income up to $2 million, up to the highest NYS marginal tax rate of 10.90%.

The annual return will report the PTE taxable income, total tax liability, and the direct share of PTET that is available to each owner as a tax credit. This PTET credit, equal to 100% of the tax paid, will be claimed by the owner on their personal New York tax return. Certain trust owners may also be eligible to claim the PTET credit. Corporation and partnership owners are not eligible for PTET credits and therefore, PTET won’t be paid on their shares of the income.

Resident owners of a PTE may claim a resident tax credit on Form IT-112-R for the payment of another state’s PTET by their partnership or S corporation.

The PTET has brought challenges and complexities with it. The silver lining is an opportunity for significant Federal tax savings for NY business owners. Please contact our team of dedicated professionals if you’d like to discuss if and how this program can benefit you and your business.

 

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.