Yeo & Yeo Promotes Marisa Ahrens and Jesse Marenger

Yeo & Yeo CPAs & Business Consultants is pleased to announce the promotion of two associates to senior manager.

Marisa Ahrens, CPA, provides Audit & Assurance services for schools, retirement plans, healthcare organizations, for-profit companies and Non-Profit organizations. She is a member of the firm’s Retirement Plan Audit Services Group and the Healthcare Services Group and has ten years of audit experience. Ahrens is a member of the Michigan Association of Certified Public Accountants and the American Institute of Certified Public Accountants. She is the treasurer for the Saginaw County Business & Education Partnership and the Mid-Michigan Children’s Museum. She also coaches youth soccer in the Frankenmuth community. Ahrens is based in the firm’s Saginaw office and is the business development leader for that office.

Jesse Marenger, CPA, works in the firm’s Assurance Service Line, specializing in retirement plan audit services. Marenger joined Yeo & Yeo in 2009 and is the leader of the firm’s Retirement Plan Audit Services Group and has streamlined and developed a unique approach to its retirement plan audits. Marenger is a member of the American Institute of Certified Public Accountants and the Michigan Association of Certified Public Accountants. In the community, he is an auditor for the Miss Saginaw County and Outstanding Teen Scholarship Pageant, and the Miss Great Lakes Bay Pageant. He is also treasurer for Freeland Cooperative Preschool, and a member of the Fordney Club of Saginaw County. Marenger is based in the firm’s Saginaw office. 

Yeo & Yeo CPAs & Business Consultants is pleased to announce the promotion of Kelly J. Smith to Director of Human Resources.

“Kelly’s commitment and leadership continues to be instrumental in the growth of our Human Resources department,” said President & CEO Thomas E. Hollerback. “Kelly has proven to be immeasurably dedicated to Yeo & Yeo and puts the needs of the employees before her own every day.”

Smith is based in the firm’s Saginaw headquarters and leads the Human Resources department. She has been with Yeo & Yeo for 16 years and has been instrumental in implementing the firm’s automated employee performance appraisal process and paperless personnel files. Smith is responsible for the firm’s payroll administration system and manages the firm’s healthcare plan, employee benefits, and human resource policies and procedures. She is a member of the Great Lakes Bay Chapter of the American Payroll Association.

Yeo & Yeo CPAs & Business Consultants is pleased to announce that Ali N. Barnes, CPA, Bradley M. DeVries, CPA, CAE, and Kristi Krafft-Bellsky, CPA, have been promoted to the position of principal.

Thomas E. Hollerback, president & CEO, says, “Our three 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 Ali, Brad and Kristi to the principal/ownership group.”

DeVries specializes in audit, consulting and tax services for nonprofit organizations, affordable housing, trade associations and real estate entities. He is a member of the firm’s Nonprofit, Audit and Real Estate Services Groups. As a Certified Association Executive, DeVries provides clients with in-depth expertise in nonprofit and association management. He also holds a Non-Profit Certificate 1 from the American Institute of Certified Public Accountants. He is a member of the Michigan Society of Association Executives and the Michigan Nonprofit Association.

DeVries joined Yeo & Yeo in 2005 and is based in the firm’s Lansing office. In the community, he is the treasurer of a condo association and a graduate of Leadership Lansing.

Barnes is based in Yeo & Yeo’s Alma office and provides audit services, with an emphasis on government entities, schools, nonprofit organizations and employee retirement benefit plans. She joined Yeo & Yeo in 2007 and is a member of the firm’s Audit Services Group, Pension Services Group and Government Services Group.

In the community, Barnes serves on the board of directors and finance committee for the Gratiot County Community Foundation. She is also board treasurer for the Alma Police Athletic League and serves on the finance committee for Girls on the Run.

Krafft-Bellsky is the firm’s Director of Quality Control, overseeing the development and implementation of policies and processes to comply with professional standards and regulatory requirements. She joined Yeo & Yeo in 2003 and led the development of the firm’s award-winning YeoLEAN Audit Process that continues to significantly benefit the firm, the professional staff and the firm’s clients. Krafft-Bellsky is a member of the firm’s Audit Services Group and Education Services Group and is based in the firm’s Saginaw headquarters.

In the community, Krafft-Bellsky is treasurer of the Frankenmuth Jaycees’ $1 million spray park project and treasurer of the Frankenmuth Community Foundation’s Legacy Ball Committee. She is a graduate of the Saginaw County 1000 Leaders initiative and Leadership Saginaw County. She is a member of 100+ Women Who Care Mid-Michigan and serves as an AYSO 5U soccer coach.

The IRS has confirmed that it will begin accepting and processing 2018 tax returns on January 28, 2019, and that it will pay tax refunds despite the partial shutdown of the federal government. The IRS said Congress has directed the payment of all tax refunds through a permanent, indefinite appropriation.

There aren’t too many things businesses can do after a year ends to reduce tax liability for that year. However, you might be able to pay employee bonuses for 2018 in 2019 and still deduct them on your 2018 tax return. In certain circumstances, businesses can 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).

Basic requirements

First, 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.

Second, even for accrual-basis taxpayers, the 2½ month rule isn’t automatic. The bonuses can be deducted on the tax return for the year they’re earned only if the business’s bonus liability was fixed by the end of the year.

Passing the test

For accrual-basis taxpayers, a liability (such as a bonus) is deductible when it is incurred. To determine this, the IRS applies the “all-events test.” Under this test, a liability is incurred 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 last 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 still be an employee on the payment date to receive the bonus. Even when the amount of each employee’s bonus is fixed at the end of the tax year, if employees who leave the company before the payment date forfeit their bonuses, the all-events test isn’t satisfied until the payment date. Why? The business’s liability for bonuses isn’t fixed until then.

Diving into a bonus pool

Fortunately, it’s possible to accelerate deductions with a carefully designed bonus pool arrangement. According to the IRS, 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. It doesn’t matter that amounts allocated to specific employees aren’t determined until the payment date.

When you can deduct bonuses

So does your current bonus plan allow you to take 2018 deductions for bonuses paid in early 2019? If you’re not sure, contact us. We can review your situation and determine when you can deduct your bonus payments.

If you’re an accrual taxpayer but don’t qualify to accelerate your bonus deductions this time, we can help you design a bonus plan for 2019 that will allow you to accelerate deductions when you file your 2019 return next year.

© 2019

Retirement plan contribution limits are indexed for inflation, and many have gone up for 2019, giving you opportunities to increase your retirement savings:

• Elective deferrals to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans: $19,000 (up from $18,500)
• Contributions to defined contribution plans: $56,000 (up from $55,000)
• Contributions to SIMPLEs: $13,000 (up from $12,500)
• Contributions to IRAs: $6,000 (up from $5,500)

One exception is catch-up contributions for taxpayers age 50 or older, which remain at the same levels as for 2018:

• Catch-up contributions to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans: $6,000
• Catch-up contributions to SIMPLEs: $3,000
• Catch-up contributions to IRAs: $1,000

Keep in mind that additional factors may affect how much you’re allowed to contribute (or how much your employer can contribute on your behalf). For example, income-based limits may reduce or eliminate your ability to make Roth IRA contributions or to make deductible traditional IRA contributions.

For more on how to make the most of your tax-advantaged retirement-saving opportunities in 2019, please contact us.

© 2018

Tax planning is a juggling act for business owners. You have to keep your eye on your company’s income and expenses and applicable tax breaks (especially if you own a pass-through entity). But you also must look out for your own financial future.

For example, you need to develop an exit strategy so that taxes don’t trip you up when you retire or leave the business for some other reason. An exit strategy is a plan for passing on responsibility for running the company, transferring ownership and extracting your money from the business.

Buy-sell agreement

When a business has more than one owner, a buy-sell agreement can be a powerful tool. The agreement controls what happens to the business when a specified event occurs, such as an owner’s retirement, disability or death. Among other benefits, a well-drafted agreement:

• Provides a ready market for the departing owner’s shares,
• Prescribes a method for setting a price for the shares, and
• Allows business continuity by preventing disagreements caused by new owners.

A key issue with any buy-sell agreement is providing the buyer(s) with a means of funding the purchase. Life or disability insurance often helps fulfill this need and can give rise to several tax issues and opportunities. One of the biggest advantages of life insurance as a funding method is that proceeds generally are excluded from the beneficiary’s taxable income.

Succession within the family

You can pass your business on to family members by giving them interests, selling them interests or doing some of each. Be sure to consider your income needs, the tax consequences, and how family members will feel about your choice.

Under the annual gift tax exclusion, you can gift up to $15,000 of ownership interests without using up any of your lifetime gift and estate tax exemption. Valuation discounts may further reduce the taxable value of the gift.

With the gift and estate tax exemption approximately doubled through 2025, gift and estate taxes may be less of a concern for some business owners. But others may want to make substantial transfers now to take maximum advantage of the high exemption. What’s right for you will depend on the value of your business and your timeline for transferring ownership.

Plan ahead

If you don’t have co-owners or want to pass the business to family members, other options include a management buyout, an employee stock ownership plan (ESOP) or a sale to an outsider. Each involves a variety of tax and nontax considerations.

Please contact us to discuss your exit strategy. To be successful, your strategy will require planning well in advance of the transition.

© 2018

The dawning of 2019 means the 2018 income tax filing season will soon be upon us. After year end, it’s generally too late to take action to reduce 2018 taxes. Business owners may, therefore, want to shift their focus to assessing whether they’ll likely owe taxes or get a refund when they file their returns this spring, so they can plan accordingly.

With the biggest tax law changes in decades — under the Tax Cuts and Jobs Act (TCJA) — generally going into effect beginning in 2018, most businesses and their owners will be significantly impacted. So, refreshing yourself on the major changes is a good idea.

Taxation of pass-through entities

These changes generally affect owners of S corporations, partnerships and limited liability companies (LLCs) treated as partnerships, as well as sole proprietors:

• Drops of individual income tax rates ranging from 0 to 4 percentage points (depending on the bracket) to 10%, 12%, 22%, 24%, 32%, 35% and 37%
• A new 20% qualified business income deduction for eligible owners (the Section 199A deduction)
• Changes to many other tax breaks for individuals that will impact owners’ overall tax liability

Taxation of corporations

These changes generally affect C corporations, personal service corporations (PSCs) and LLCs treated as C corporations:

• Replacement of graduated corporate rates ranging from 15% to 35% with a flat corporate rate of 21%
• Replacement of the flat PSC rate of 35% with a flat rate of 21%
• Repeal of the 20% corporate alternative minimum tax (AMT)

Tax break positives

These changes generally apply to both pass-through entities and corporations:

• Doubling of bonus depreciation to 100% and expansion of qualified assets to include used assets
• Doubling of the Section 179 expensing limit to $1 million and an increase of the expensing phaseout threshold to $2.5 million
• A new tax credit for employer-paid family and medical leave

Tax break negatives

These changes generally also apply to both pass-through entities and corporations:

• A new disallowance of deductions for net interest expense in excess of 30% of the business’s adjusted taxable income (exceptions apply)
• New limits on net operating loss (NOL) deductions
• Elimination of the Section 199 deduction (not to be confused with the new Sec.199A deduction), which was for qualified domestic production activities and commonly referred to as the “manufacturers’ deduction”
• A new rule limiting like-kind exchanges to real property that is not held primarily for sale (generally no more like-kind exchanges for personal property)
• New limitations on deductions for certain employee fringe benefits, such as entertainment and, in certain circumstances, meals and transportation

Preparing for 2018 filing

Keep in mind that additional rules and limits apply to the rates and breaks covered here. Also, these are only some of the most significant and widely applicable TCJA changes; you and your business could be affected by other changes as well. Contact us to learn precisely how you might be affected and for help preparing for your 2018 tax return filing — and beginning to plan for 2019, too.

© 2018

We are pleased to announce that Rachel Van Slembrouck, 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 organization’s mission and core values.

“Rachel’s attention to client service is outstanding,” said President & CEO Thomas Hollerback. “Her clients rave about her, she is very responsive to their needs and genuinely cares about every one of them. She is deserving of the award, and we are proud of her accomplishments as well as her commitment to serving the community.”

Van Slembrouck is a manager in the Saginaw office and serves in the consulting service line, specializing in outsourced accounting. She is also a member of the firm’s Client Accounting Software Team.

Van Slembrouck received multiple nominations for the Spirit of Yeo Award. One of her nominators said, “Rachel is championing our outsourced accounting services. The consulting service line has had great success due to Rachel’s ability to build client relationships and train the staff to expand our outsourced accounting solutions.”Another nominator said, “Rachel puts her heart and soul into everything she does and holds herself to the highest standards. She is well organized and a great communicator. She demonstrates great leadership.”

In the community, she serves as the treasurer for the Saginaw Valley State University College of Business and Management’s Young Alumni board. She is a board member for the Saginaw County Animal Control Advisory Council, and was treasurer for the August 2018 Saginaw County Animal Control Millage campaign. Van Slembrouck also volunteers as a volleyball coach at Bethlehem Lutheran School.

2018 marked the fifth year of the award with Yeo & Yeo employees submitting 32 nominations for 23 individuals. The firm’s Career Advocacy Team reviewed the submissions, and many individuals were nominated more than once.

Governor Snyder recently signed legislation that will affect most Michigan businesses. Yeo & Yeo wants to keep you informed of changes in Michigan Minimum Wage and the new Earned Sick Leave Act.

Michigan Minimum Wage Increases

• Requires a gradual increase in minimum wage from $9.25 per hour to $12.05 per hour by January 1, 2030, based on the following schedule:

End of March 2019: $9.45/hour

1/1/20: $9.65/hour

1/1/21: $9.87/hour

1/1/22: $10.10/hour

1/1/23: $10.33/hour

1/1/24: $10.56/hour

1/1/25: $10.80/hour

1/1/26: $11.04/hour

1/1/27: $11.29/hour

1/1/28: $11.54/hour

1/1/29: $11.79/hour

1/1/30: $12.05/hour

• No inflationary increases.

• The minimum wage for tipped employees remains tied to 38% of the regular minimum wage rate.*

*Under the law, all tipped employees are guaranteed to make at least the minimum wage. If their tips plus the tipped employee minimum wage does not equal or exceed the regular minimum wage, the employer must pay any shortfall to the employee. Failure to comply results in fines and fees.

Paid Sick Leave

The Act goes into effect in March 2019.

Which employers and employees are exempt?

• Applies only to employers who employ 50 or more employees.
• Time begins to accrue on the effective date or date of hire, but the employer may allow new employees to wait 90 days before using their time.
• Exempts employees exempt from FLSA overtime requirements, private sector employees covered by a collective bargaining agreement, temporary workers, employees who work in other states, independent contractors, variable hour employees, certain part-time and seasonal employees and flight deck, cabin crew and railroad workers. (Note: Part-time is defined as an individual who has worked, on average, fewer than 25 hours/week during the preceding calendar year. Seasonal employee is defined as an individual employed by an employer for 25 weeks or less in a calendar year for a job scheduled for 25 weeks or fewer.)

Accrual and carry-over

• Employees would accrue 1 hour of paid sick leave for every 35 hours worked, up to 40 hours per year. Allows employer to limit accrual to 1 hour per week. An employer is not required to allow an eligible employee to use more than 40 hours of paid sick leave in a single benefit year or to carry over more than 40 hours of time from one benefit year to another.
• Employers may provide all 40 hours at the start of a benefit year to avoid carry-over. Can pro-rate time for new employees.
• The law creates a rebuttable presumption that an employer complies with the law if the employer provides the requisite hours annually. This time can include paid vacation days, personal days and paid time off.

Use and payment of time

• Time may be used in 1-hour increments unless the employer has a different increment policy and that policy is in writing in an employee handbook.
• The employer must pay at a pay rate equal to the greater of either the normal hourly wage, the base wage or the applicable minimum wage rate. An employer is not required to include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay or gratuities in the calculation. 

Notification / documentation

• The employer may require the employee to comply with the employer’s usual and customary notification, procedural and documentation requirements. Employer must give the employee three days to produce any required documentation.

Litigation Support , fines and fees

• The law creates an administrative process for employees to lodge complaints. The Department must issue a determination upon conclusion of an investigation and inform the employer of its appeals rights. The Department may assess payment of medical leave and back-pay and will serve as the trustee.
• The law ensures employees are aware of their rights and able to seek relief if they’ve been affected by a violation.

Please contact Yeo & Yeo if you need assistance with implementing these laws into your payroll process.

Our affiliate, Yeo & Yeo Technology is proud to have secured another two-year contract with the Regional Educational Media Center Association of Michigan (REMC) to sell Ergotron products during 2019 and 2020. Beginning January 1, 2019, the REMC contract allows us to provide special, pre-approved, bid pricing to schools, local and state government entities, and teaching hospitals.

Learn more about Yeo & Yeo Technology and REMC SAVE. 

Tax planning is a year-round activity, but there are still some year-end strategies you can use to lower your 2018 tax bill. Here are six last-minute tax moves business owners should consider:

1. Postpone invoices. If your business uses the cash method of accounting, and it would benefit from deferring income to next year, wait until early 2019 to send invoices. Accrual-basis businesses can defer recognition of certain advance payments for products to be delivered or services to be provided next year.
2. Prepay expenses. A cash-basis business may be able to reduce its 2018 taxes by prepaying certain expenses — such as lease payments, insurance premiums, utility bills, office supplies and taxes — before the end of the year. Many expenses can be deducted up to 12 months in advance.
3. Buy equipment. Take advantage of 100% bonus depreciation and Section 179 expensing to deduct the full cost of qualifying equipment or other fixed assets. Under the Tax Cuts and Jobs Act, bonus depreciation, like Sec. 179 expensing, is now available for both new and used assets. Keep in mind that, to deduct the expense on your 2018 return, the assets must be placed in service — not just purchased — by the end of the year.
4. Use credit cards. What if you’d like to prepay expenses or buy equipment before the end of the year, but you don’t have the cash? Consider using your business credit card. Generally, expenses paid by credit card are deductible when charged, even if you don’t pay the credit card bill until next year.
5. Contribute to retirement plans. If you’re self-employed or own a pass-through business — such as a partnership, limited liability company or S corporation — one of the best ways to reduce your 2018 tax bill is to increase deductible contributions to retirement plans. Usually, these contributions must be made by year-end. But certain plans — such as SEP IRAs — allow your business to make 2018 contributions up until its tax return due date (including extensions).
6. Qualify for the pass-through deduction. If your business is a sole proprietorship or pass-through entity, you may qualify for the new pass-through deduction of up to 20% of qualified business income. But if your taxable income exceeds $157,500 ($315,000 for joint filers), certain limitations kick in that can reduce or even eliminate the deduction. One way to avoid these limitations is to reduce your income below the threshold — for example, by having your business increase its retirement plan contributions.
   
   

Most of these strategies are subject to various limitations and restrictions beyond what we’ve covered here, so please consult us before you implement them. We can also offer more ideas for reducing your taxes this year and next.

© 2018

With the dawn of 2019 on the near horizon, here’s a quick list of tax and financial to-dos you should address before 2018 ends:

Check your FSA balance. If you have a Flexible Spending Account (FSA) for healthcare expenses, you need to incur qualifying expenses by December 31 to use up these funds or you’ll potentially lose them. (Some plans allow you to carry over up to $500 to the following year or give you a 2½-month grace period to incur qualifying expenses.) Use expiring FSA funds to pay for eyeglasses, dental work or eligible drugs or health products.

Max out tax-advantaged savings. Reduce your 2018 income by contributing to traditional IRAs, employer-sponsored retirement plans or Health Savings Accounts to the extent you’re eligible. (Certain vehicles, including traditional and SEP IRAs, allow you to deduct contributions on your 2018 return if they’re made by April 15, 2019.)

Take RMDs. If you’ve reached age 70½, you generally must take required minimum distributions (RMDs) from IRAs or qualified employer-sponsored retirement plans before the end of the year to avoid a 50% penalty. If you turned 70½ this year, you have until April 1, 2019, to take your first RMD. But keep in mind that, if you defer your first distribution, you’ll have to take two next year.

Consider a QCD. If you’re 70½ or older and charitably inclined, a qualified charitable distribution (QCD) allows you to transfer up to $100,000 tax-free directly from your IRA to a qualified charity and to apply the amount toward your RMD. This is a big advantage if you wouldn’t otherwise qualify for a charitable deduction (because you don’t itemize, for example).

Use it or lose it. Make the most of annual limits that don’t carry over from year to year, even if doing so won’t provide an income tax deduction. For example, if gift and estate taxes are a concern, make annual exclusion gifts up to $15,000 per recipient. If you have a Coverdell Education Savings Account, contribute the maximum amount you’re allowed.

Contribute to a Sec. 529 plan. Sec. 529 prepaid tuition or college savings plans aren’t subject to federal annual contribution limits and don’t provide a federal income tax deduction. But contributions may entitle you to a state income tax deduction (depending on your state and plan).

Review withholding. The IRS cautions that people with more complex tax situations face the possibility of having their income taxes underwithheld due to changes under the Tax Cuts and Jobs Act. Use its withholding calculator (available at irs.gov) to review your situation. If it looks like you could face underpayment penalties, increase withholdings from your or your spouse’s wages for the remainder of the year. (Withholdings, unlike estimated tax payments, are treated as if they were paid evenly over the year.)

For assistance with these and other year-end planning ideas, please contact us.

© 2018

Crowdfunding, also known as crowdsourcing, was originally used by entrepreneurs and artists to raise money for creative projects and business endeavors; however, it has increasingly become a way for teachers to obtain classroom supplies or funding for projects. Education-focused crowdsourcing sites have been introduced to help teachers fill the gaps in funding provided by the school. It is important for districts to have the proper policies and procedures in place regarding these funds.

Crowdfunding policy

The policy should be broad and define what crowdfunding is, and make it clear which activities are allowable. Typically, this involves the use of an online service or website-based platform to host the fundraiser and a digital campaign to solicit funds. The specific details of the project management should be outlined in the district’s procedures manual.

Crowdfunding procedures

Key elements of the procedures surrounding crowdfunding include the following:

• Platform approval – A list of websites/services permitted should be approved by an appropriate level of authority (i.e., the superintendent).
• Application/pre-approval – An application should be submitted to the proper level of authority (principal, etc.) to review and determine if any issues are present. The application should include the following:
  • Budget for the project
  • Description of the project that will be used on the website, including any photos. This description should avoid 1) casting the district in a negative light, 2) specific student needs, and 3) implying that the funds are necessary for the students to be appropriately served and educated.
  • Copy of the personal profile that will be utilized by the staff member on the site
  • Confirmation that the funds raised and/or the items purchased by the crowdfunding site will go directly from the crowdfunding site to the Principal (or another appropriate body) of the school that will benefit
  • Description of any rewards, perks, or thank-you gifts that will be provided to donors, including the cost and source
• Submission – Once approved, the project can be posted to the crowdfunding site.
• Tax implications – The crowdfunding site should be a charitable organization (i.e., a 501(c)(3) entity) so that donations to it are tax-deductible to the donors. If not, the posting should make it clear that donors are responsible for any tax consequences.
• Campaign – The staff member should keep the Principal informed of the status of the campaign as it progresses.
• Conclusion – Once the funds and/or supplies/equipment are received by the district, they should be made available to the staff member responsible for the campaign and used specifically for the stated purpose of the project. Documentation should be submitted for any expenditures of the funds and a final expenditure report should be utilized at its conclusion.
• Ownership – All funds raised and materials donated should be considered the property of the district. In the event the staff member who ran the crowdfunding campaign terminates his/her employment with the district, the funds/materials should remain with the district.

Please contact your local Yeo & Yeo professional if you have questions or need additional information about crowdfunding.

Trusts and estates have been allowed a variety of miscellaneous itemized deductions. However, the Tax Cuts and Jobs Act (TCJA) has changed these deductions.

Miscellaneous itemized deductions (MIDS) are generally costs that would be incurred by individuals as well as estates and trusts. MIDS have historically been deductible on both individual and trust tax returns to the extent that they exceed the 2 percent of Adjusted Gross Income. The TCJA has suspended these deductions for tax years 2018-2025. So, how does this impact your client’s trust?

Many costs will still be deductible. In general, if an individual would not incur the cost, it is deductible. Those include:

• Fiduciary fees not associated with investment advice
• Appraisal fees incurred for the administration of a trust or estate
• Probate fees
• Bond premiums
• Legal notices
• Fiduciary accountings
• Exemptions
• Income distribution deduction

Many costs will no longer be deductible by a trust. In general, if the cost could also be incurred by an individual, it would not be deductible. These include:

• Investment advisory fees—except for fees incurred to implement a specialized investment strategy; distinguish between normal fees versus these extraordinary fees
• Appraisal fees (unless they are incurred in the administration of a trust or an estate)—
• oAn appraisal taken due to the death of the taxpayer is deductible
• oAn appraisal taken due to a bank request is not nondeductible
• Property ownership costs for nontrade or business property—i.e., utilities, insurance, etc.
• oIf the trust rents out a property, these costs would be deductible to offset the rental income
• oMortgage interest and property taxes ($10,000 state and local tax limitation applies) are still deductible
• MIDS from partnerships and S Corps
• Excess deductions on termination of an estate or trust
• Safe deposit box rental

If you wish to discuss the impact of these deductibility rules on a particular trust or estate situation, please contact Yeo & Yeo.

Yeo & Yeo recognized 18 associates across the firm and its affiliates for years of dedicated service at the firm’s annual holiday celebration held at Horizons Conference Center in Saginaw.

Thomas Hollerback, President & CEO, Saginaw, is CEO for all of Yeo & Yeo’s nine offices and affiliates, was honored for 35 years of service. Tom serves on Yeo & Yeo’s Board of Directors, is the Cornerstone Leader for Yeo & Yeo’s One Firm Concept, and M & A and Investments. He has served as the chairman of the Saginaw Medical Federal Credit Union for more than 20 years.

Peter Bender, CPA, CFP, Managing Principal, Saginaw, was honored for 30 years of service. Peter is the Managing Principal for Yeo & Yeo’s Saginaw office, is the leader for affiliate Yeo & Yeo Financial Services and is a member of Yeo & Yeo’s board of directors. He also serves on the board of Wellspring Lutheran Services, is board chairman for the Frankenmuth Credit Union and serves on the Valley Lutheran High School Growing Campaign committee. Check the background of Pete Bender on FINRA’s Broker Check.

Michael Oliphant, CPA, CVA, CFE, Principal, Kalamazoo, was honored for 25 years of service. Michael is the firm’s Organic Growth Cornerstone leader and a member of the Business Valuation and Litigation Support Services Group. He specializes in business consulting, financial reporting, and tax planning and preparation. Michael is a member of the Rotary Club of Kalamazoo and treasurer of Kalamazoo Habitat for Humanity.

The following professionals were honored for 20 years of service.

Danielle Cary, CPA, Principal, Ann Arbor, Danielle leads the firm’s State and Local Tax Team and serves in the Tax Service Line. She has expertise in tax planning services for individuals and businesses, multi-state taxation, and business consulting.

Brian Dixon, CPA, Principal, Saginaw, serves in the Assurance Service Line and has expertise in audits for healthcare organizations, schools, and nonprofits. He is board treasurer for the United Way of Saginaw County and the Frankenmuth Credit Union. He also serves on the board of the Saginaw Area Jaycees Foundation.

Denise Garrett, CPC, CPPM, CSFAC, AAPC Fellow, Training & Development Coordinator, Yeo & Yeo Medical Billing & Consulting, is an account manager and helps staff with coding questions and appealing claims. She also works on consulting projects including billing audits and chart audits. Denise is a Certified Professional Coder and a Certified Foot & Ankle Surgical Coder, with expertise in the coding of diagnoses, services, and procedures for physician practices.

Suzanne Lozano, CPA, Principal, Saginaw, leads the firm’s Consulting Service Line, with a focus on healthcare. She serves on the Saginaw County Chamber board and is involved with the Mid-Michigan Children’s Museum, Heritage High School, and Peace Lutheran Church and School.

Christine Porras, Payroll Supervisor, Saginaw, oversees client payroll services. She is a co-founder of the Great Lakes Bay Chapter of the American Payroll Association. She is also the treasurer of the Saginaw County Veteran’s Memorial Plaza.

Jean Vollink, CPA, Tax Supervisor, Kalamazoo, works part-time in the Consulting Service Line and the Tax Service Line with a focus on tax preparation and serves on the firm’s Tax Services Group and the Estate & Trust Services Group. She joined Yeo & Yeo through a merger and brought with her 23 years of prior accounting experience.

The following professionals were honored for 15 years of service.

Linda Bender, Accounting Assistant, Yeo & Yeo Technology, works part-time and has expertise in purchasing, hardware and software billings, and merchandise returns. She is active in three different ministries at St. Lorenz Church in Frankenmuth.

Kimberly Jako, Administrative Assistant, Kalamazoo, is responsible for tax e-filing and document formatting and management. She is a volunteer with the Kalamazoo Animal Rescue.

Kristi Krafft-Bellsky, CPA, Director of Quality Control, Saginaw, is responsible for internal quality control throughout Yeo & Yeo’s nine offices and implements policies to comply with professional standards and regulatory requirements and oversees the firm’s peer review process. Kristi is the treasurer and chair of the Frankenmuth Community Foundation’s Legacy Ball. She is also the treasurer of the Frankenmuth Jaycees’ $1 million spray park project.

Jan Morris, Payroll Accountant, Saginaw, works part-time processing payroll for clients. She served the Saginaw Valley Concert Association as a board member for six years and board president for three years.

The following professionals were honored for 10 years of service.

Marisa Ahrens, CPA, Manager, Saginaw, audits employee benefit plans, nonprofits, school districts, and healthcare organizations. Marisa is the board treasurer for the Saginaw County Business & Education Partnership, a board member for the Mid-Michigan Children’s Museum, a member of the Frankenmuth Jaycees and an AYSO 5U assistant soccer coach.

Jody Darby, Help Desk Coordinator, Yeo & Yeo Technology, works with customers to schedule appointments, solve problems and assist with inquiries. She also coordinates multiple dispatch schedules for the affiliates and technicians.

Jen Gibas, Administrative Assistant, Saginaw, serves in the Consulting Service Line and leads the Administrative Assistant team in Saginaw. She serves two of the Saginaw office principals and performs many administrative tasks to keep the office running smoothly. She oversees most of the supply ordering for the firm.

David Jewell, CPA, Principal, Kalamazoo, is the leader of the firm’s Tax Service Line and is responsible for the oversight of the firm’s tax services. He devotes significant time to the Boys & Girls Club of Greater Kalamazoo – he serves on the Club’s executive committee and is board treasurer and chair of the finance committee.

View the press release here.

Wage Statements Must Be Submitted Before Filing Sales, Use and Withholding Taxes Annual Return

Business taxpayers are reminded about a new state law that modifies the due date for wage statements, according to the Michigan Department of Treasury (Treasury).

Public Act 118 of 2018 requires that wage statements — such as W-2, W-2G, 1099-R and 1099-MISC — must be submitted on or before Jan. 31, 2019. This state law change was made to match both Treasury and Internal Revenue Service wage statement submission deadlines.

Beginning January 2019, employers may electronically upload their wage statements by using Michigan Treasury Online (MTO). Employers with more than 250 employees must file their wage statements electronically.

For more information about MTO and how to file wage statements electronically, visit: mto.treasury.michigan.gov

Although the wage statements are due on or before Jan. 31, 2019, the Sales, Use and Withholding Taxes Annual Return (Form 5081) is still due on Feb. 28. Wage statements filed on or before the Jan. 31 due date need not be submitted again with Form 5081.

“Business taxpayers should keep these changes and options in mind when submitting wage statements and filing returns,” said State Deputy Treasurer Glenn White, who oversees Treasury’s Tax Administration programs. “If deadlines are missed, there could be processing delays and penalties applied.”

To learn more about Michigan’s tax system, go to www.michigan.gov/taxes or follow the state Treasury Department on Twitter at @MITreasury.

With the advancements in technology – ranging from newer and more efficient machinery, to being able to run your farm from your phone – farmers have more opportunities today than ever before to keep their costs low. Today’s young farmers, many of whom have attended a secondary school specializing in agriculture, have been exposed to these new technologies and are finding ways to implement them into their farm management programs. The next step, and one that is sometimes overlooked, is making proper and timely adjustments to the production process to limit unnecessary spending in the field.

Having a strategy of what to plant where is nothing new to farmers; they do it every year. Right after the current year harvest ends, they are already planning for next year’s crop. In Michigan, looking ahead to the 2019 crop year, there are no signs that crop prices are going to skyrocket, so making sound planning decisions with your inputs is more important than ever before. Margins are going to be tighter, so it is even more important than in past years to make smart decisions on seed type, fertilizer and spray combinations, and other necessary input costs. What works in one field may not work in another, and being able to proactively identify those situations and respond in a cost-effective manner is what separates a profitable farm from the rest.

A few examples of farm management practices that act as tax planning methods as well include buying newer equipment with better efficiencies, prepaying for seed, fertilizer, and spray, and controlling labor costs in the down months. With commodity prices where they are today, (and likely will remain for 2019), cash flow may not permit some of the above options. Buying new equipment at the end of the year to write off for tax purposes has been one of the most beneficial planning strategies for farmers in the past, but with commodity prices not being as strong recently and production costs rising, cash flow shortages have made this option more difficult.

With the TCJA, there are some new guidelines pertinant to the agriculture industry that can be utalized to minimize tax burden. Another way farmers plan for taxes is to prepay for expenses the year before they implement. Per the tax laws, you cannot deduct more than 50 percent of other operating expenses using prepaid plans. With cash flow difficulties that some farmers face, this option could also be harder to manage in future years.

However, other steps can be taken to maintain a profitable farm. Tracking inputs and keeping detailed records of when, how, and where you are putting inputs into the fields is key to keeping costs in check. Marketing your commodities to guarantee a certain price, instead of trying to guess when prices will be the highest, is another option to consider to make more with your crop yield. Finally, using results from the current year to make adjustments going forward will help preserve needed cash flow. Many software packages are available that help track these costs at the field level, which makes it easier to identify which fields are not performing up to par.

If you have any questions regarding methods used to track field input prices, please reach out to me or another member of Yeo & Yeo’s Agribusiness Services Group.

Prepare now for the following payroll changes that will take effect on January 1, 2019, and also consider some actions to take before year-end.

Michigan Minimum Wage and Earned Sick Leave Act.

Social Security Wage Base. The 2019 wage base will be $132,900. The employee and employer match will be 6.2%. The maximum deduction will be $8,239.80 ($132,900 x 6.2%).

Dependent Care Limits. The maximum exclusion from gross income under a dependent care program is $5,000 for an individual or a married couple filing jointly.

Health Flexible Spending Arrangements. The dollar limitation on voluntary employee salary reductions for contributions to a health flexible spending arrangement (FSA) is $2,700.

Health Savings Accounts. HSAs are for eligible individuals in a high deductible health plan. The maximum annual contribution that can be made to an HSA in 2019:

Individual: $3,500
Family: $7,000

Catch-up contributions: Individuals 55 and older can make additional catch-up contributions to an HSA until they are enrolled in Medicare. The additional allowable contribution is $1,000.

IRA Contribution Limits. The 2019 contribution limit for Simple IRAs is $13,000. The catch-up contribution for those age 50 or older by December 31, 2019, is $3,000.

401(k), 403(b) and 457 Contribution Limits. The contribution limit for these plans’ employee deferrals is $19,000. The catch-up contribution for those age 50 or older by December 31, 2019, is $6,000.