Information Type: Articles

RitzHolman CPAs Celebrates the Life of Tricia Knight, CPA

Posted on March 1, 2022 by -

Tricia spent over 40 years passionately serving her clients and the Milwaukee community. When Tricia began her career, the industry was dominated by men. This was true when she became one of the first female partners in Wisconsin in 1985 at age 29. “At that time, firms did not allow women to hold management positions and it was difficult for clients to accept,” said Knight, “Now women are visible at all levels in the profession and taking on leadership roles.*”

She fought to shape the future of accounting through her advocacy efforts, mentorship and leadership skills. She impacted so many lives through her kindness, community giving and professional work. Tricia was an inspiration to everyone who knew her.

Community Involvement

Throughout her professional career, she demonstrated leadership at the firm and a commitment to her clients, but what set her apart was her willingness to share her time and expertise with the community in which she worked and lived. Tricia was involved in many local and state-wide organizations, including:

  • Board of Directors for the WICPA (Wisconsin Institute of CPAs)
  • Board of Directors for the Wild Space Dance Company
  • Board of Directors for the YMCA Holton Youth Center
  • Board of Directors for the Charles Allis/Villa Terrace Art Museum
  • Board of Directors for the Wisconsin Trust Account Foundation, Inc.
  • The WICPA’s Federal Tax and IRS Liaison Committees
  • Board Liaison to the WICPA’s Annual Tax Conference Committee
  • Member of the Wisconsin and Indiana CPA Societies
  • WICPA Executive Finance Committee
  • Three Holy Women Finance Committee
  • Treasurer of the Crescent Condo Association
  • Member and Volunteer of Professional Dimensions

Tricia was the embodiment of our mission to serve our clients and the community with passion, exceptional knowledge and superior service.

Awards

  • St. Joan Antida 2018 Deus Solus Award
  • Five Star Financial Services Professional 2016 award winner in the area of Taxation
  • WICPA Achievement Award 2011
  • WICPA Public Service Award 2008
  • Holton Youth Center Outstanding Support Award 2000

Tricia was a perpetual cheerleader for volunteering your time, being passionate about your career, and uplifting those around you. We celebrate the life of our dear friend and colleague. May we strive to live and work by the inspiration she gifted to us.

*Pinsoneault, D. (2008, Mar/Apr). Diversity: one goal, many approaches. On Balance p.12

Tricia Knight Tribute in the Milwaukee Business Journal

New PPP Guidance Issued by SBA

Posted on January 11, 2021 by -

New PPP Guidance Issued
The U.S. Small Business Administration (SBA) and Treasury recently issued guidance for the reconstituted Paycheck Protection Program (PPP).

The guidance included two interim final rules (IFRs). (1) The first issuance consolidates the rules for PPP loans for first round borrowers and outlines changes made by the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act. (2) The second lays out the guidance for the second round of loans to businesses that have previously received a PPP loan.

When Can I Apply?
The new PPP portal will re-open the week of Jan. 11. However, this date applies only to first-draw loans for small businesses from lenders from “community financial institutions”. Small business applying for a second PPP loan can begin applying Jan. 13 through these lenders. The PPP will then open to all participating lenders at an unspecified date shortly thereafter and remain open through March 31.

First-draw PPP loans

Latest Updates:

  • Expenses paid with PPP loan proceeds that are otherwise tax-deductible are allowed as deductions.
  • Simplified loan forgiveness for loans $150,000 or less

The Economic Aid Act makes first-draw PPP loans available to borrowers that were in operation on Feb. 15, 2020 and come from one of the following groups:

  • Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.
  • Sole proprietors, independent contractors, and eligible self-employed individuals.
  • Not-for-profits, including churches.
  • New: 501(c)(6) organizations with fewer 300 employees and subject to certain lobbying thresholds.
  • New: Housing cooperatives
  • New: Accommodations for food service operations with fewer than 500 employees per physical location

Second-draw PPP loans
One of the biggest changes with the new PPP is that Congress made funding available to businesses that had previously received a PPP loan.

  • Second-draw loans are available for small businesses that have:
    • 300 or fewer employees
    • 25% gross receipts decline in any quarter in 2020 compared to same quarter in 2019
    • Used or will use full amount of first-draw funds on eligible expenses
  • Maximum loan amount = $2 million
    • General rule – calculated at 2.5x average monthly payroll costs
  •  Borrower can choose a covered period that is between 8 and 24 weeks
  • Generally the same as documentation required for First Draw PPP Loans
  • Costs eligible for forgiveness are the same as in the first round but now also includes:
    • Software and cloud computing that facilitate business operation, processing payment, etc.
    • Covered property damage expenditures
    • Covered supplier costs
    • Covered worker protection expenditures

For the full report, please refer to the full (IFR’s) guidance listed in the resource section below.

First and second draw loan applications:
https://www.sba.gov/document/sba-form-2483-paycheck-protection-program-borrower-application-form
https://www.sba.gov/document/sba-form-2483-sd-ppp-second-draw-borrower-application-form

Resources:
https://home.treasury.gov/system/files/136/PPP-IFR-Paycheck-Protection-Program-as-Amended-by-Economic-Aid-Act.pdf
https://home.treasury.gov/system/files/136/PPP-IFR-Second-Draw-Loans.pdf

Tax implications of working from home and collecting unemployment

Posted on September 17, 2020 by -

COVID-19 has changed our lives in many ways, and some of the changes have tax implications.

Here is basic information about two common situations. 1. Working from home.

Many employees have been told not to come into their workplaces due to the pandemic. If you’re an employee who “telecommutes” — that is, you work at home, and communicate with your employer mainly by telephone, videoconferencing, email, etc. — you should know about the strict rules that govern whether you can deduct your home office expenses. Unfortunately, employee home office expenses aren’t currently deductible, even if your employer requires you to work from home.

Employee business expense deductions (including the expenses an employee incurs to maintain a home office) are miscellaneous itemized deductions and are disallowed from 2018 through 2025 under the Tax Cuts and Jobs Act. However, if you’re self-employed and work out of an office in your home, you can be eligible to claim home office deductions for your related expenses if you satisfy the strict rules.

2. Collecting unemployment Millions of Americans have lost their jobs due to COVID-19 and are collecting unemployment benefits.

Some of these people don’t know that these benefits are taxable and must be reported on their federal income tax returns for the tax year they were received.

Taxable benefits include the special unemployment compensation authorized under the Coronavirus Aid, Relief and Economic Security (CARES) Act. In order to avoid a surprise tax bill when filing a 2020 income tax return next year, unemployment recipients can have taxes withheld from their benefits now. Under federal law, recipients can opt to have 10% withheld from their benefits to cover part or all their tax liability. To do this, complete Form W4-V, Voluntary Withholding Request, and give it to the agency paying benefits. (Don’t send it to the IRS.) We can help We can assist you with advice about whether you qualify for home office deductions, and how much of these expenses you can deduct. We can also answer any questions you have about the taxation of unemployment benefits as well as any other tax issues that you encounter as a result of COVID-19.

© 2020

Answers to questions you may have about Economic Impact Payments

Posted on April 21, 2020 by -

Millions of eligible Americans have already received their Economic Impact Payments (EIPs) via direct deposit or paper checks, according to the IRS. Others are still waiting. The payments are part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Here are some answers to questions you may have about EIPs.
Who’s eligible to get an EIP?
Eligible taxpayers who filed their 2018 or 2019 returns and chose direct deposit of their refunds automatically receive an Economic Impact Payment. You must be a U.S. citizen or U.S. resident alien and you can’t be claimed as a dependent on someone else’s tax return. In general, you must also have a valid Social Security number and have adjusted gross income (AGI) under a certain threshold. The IRS also says that automatic payments will go to people receiving Social Security retirement or disability benefits and Railroad Retirement benefits.
How much are the payments?
EIPs can be up to $1,200 for individuals, or $2,400 for married couples, plus $500 for each qualifying child. How much income must I have to receive a payment? You don’t need to have any income to receive a payment. But for higher income people, the payments phase out. The EIP is reduced by 5% of the amount that your AGI exceeds $75,000 ($112,500 for heads of household or $150,000 for married joint filers), until it’s $0. The payment for eligible individuals with no qualifying children is reduced to $0 once AGI reaches: $198,000 for married joint filers, $136,500 for heads of household, and $99,000 for all others Each of these threshold amounts increases by $10,000 for each additional qualifying child. For example, because families with one qualifying child receive an additional $500 Payment, their $1,700 Payment ($2,900 for married joint filers) is reduced to $0 once adjusted gross income reaches: $208,000 for married joint filers, $146,500 for heads of household, $109,000 for all others.
How will I know if money has been deposited into my bank account?
The IRS stated that it will send letters to EIP recipients about the payment within 15 days after they’re made. A letter will be sent to a recipient’s last known address and will provide information on how the payment was made and how to report any failure to receive it.
Is there a way to check on the status of a payment? The IRS has introduced a new “Get My Payment” web-based tool that will: show taxpayers either their EIP amount and the scheduled delivery date by direct deposit or paper check, or that a payment hasn’t been scheduled. It also allows taxpayers who didn’t use direct deposit on their last-filed return to provide bank account information. In order to use the tool, you must enter information such as your Social Security number and birthdate.
You can access it here: https://bit.ly/2ykLSwa I tried the tool and I got the message “payment status not available.” Why? Many people report that they’re getting this message. The IRS states there are many reasons why you may see this. For example, you’re not eligible for a payment or you’re required to file a tax return and haven’t filed yet. In some cases, people are eligible but are still getting this message.
Hopefully, the IRS will have it running seamlessly soon.
© 2020

COVID-19: IRS announces more relief and details

Posted on April 14, 2020 by -

In the midst of the coronavirus (COVID-19) pandemic, Americans are focusing on their health and financial well-being. To help with the impact facing many people, the government has provided a range of relief. Here are some new announcements made by the IRS.

More deadlines extended As you probably know, the IRS postponed the due dates for certain federal income tax payments — but not all of them. New guidance now expands on the filing and payment relief for individuals, estates, corporations and others. Under IRS Notice 2020-23, nearly all tax payments and filings that would otherwise be due between April 1 and July 15, 2020, are now postponed to July 15, 2020. Most importantly, this would include any fiscal year tax returns due between those dates and any estimated tax payments due between those dates, such as the June 15 estimated tax payment deadline for individual taxpayers.

Economic Impact Payments for nonfilers

You have also likely heard about the cash payments the federal government is making to individuals under certain income thresholds. The Coronavirus Aid, Relief, and Economic Security (CARES) Act will provide an eligible individual with a cash payment equal to the sum of: $1,200 ($2,400 for eligible married couples filing jointly) plus $500 for each qualifying child. Eligibility is based on adjusted gross income (AGI). On its Twitter account, the IRS announced that it deposited the first Economic Impact Payments into taxpayers’ bank accounts on April 11. “We know many people are anxious to get their payments; we’ll continue issuing them as fast as we can,” the tax agency added. The IRS has announced additional details about these payments: “Eligible taxpayers who filed tax returns for 2019 or 2018 will receive the payments automatically,” the IRS stated.

Automatic payments will also go out to those people receiving Social Security retirement, survivors or disability benefits and Railroad Retirement benefits. There’s a new online tool on the IRS website for people who didn’t file a 2018 or 2019 federal tax return because they didn’t have enough income or otherwise weren’t required to file. These people can provide the IRS with basic information (Social Security number, name, address and dependents) so they can receive their payments.

You can access the tool here: https://bit.ly/2JXBOvM This only describes new details in a couple of the COVID-19 assistance provisions. Members of Congress are discussing another relief package so additional help may be on the way. We’ll keep you updated. Contact us if you have tax or financial questions during this challenging time.

CARES ACT changes retirement plan and charitable contribution rules

Posted on April 13, 2020 by -

As we all try to keep ourselves, our loved ones, and our communities safe from the coronavirus (COVID-19) pandemic, you may be wondering about some of the recent tax changes that were part of a tax law passed on March 27. The Coronavirus Aid, Relief, and Economic Security (CARES) Act contains a variety of relief, notably the “economic impact payments” that will be made to people under a certain income threshold. But the law also makes some changes to retirement plan rules and provides a new tax break for some people who contribute to charity.

Waiver of 10% early distribution penalty IRAs and employer sponsored retirement plans are established to be long-term retirement planning accounts. As such, the IRS imposes a penalty tax of an additional 10% if funds are distributed before reaching age 59½. (However, there are some exceptions to this rule.) Under the CARES Act, the additional 10% tax on early distributions from IRAs and defined contribution plans (such as 401(k) plans) is waived for distributions made between January 1 and December 31, 2020 by a person who (or whose family) is infected with COVID-19 or is economically harmed by it.

Penalty-free distributions are limited to $100,000, and may, subject to guidelines, be re-contributed to the plan or IRA. Income arising from the distributions is spread out over three years unless the employee elects to turn down the spread-out. Employers may amend defined contribution plans to provide for these distributions. Additionally, defined contribution plans are permitted additional flexibility in the amount and repayment terms of loans to employees who are qualified individuals.

Waiver of required distribution rules

Depending on when you were born, you generally must begin taking annual required minimum distributions (RMDs) from tax-favored retirement accounts — including traditional IRAs, SEP accounts and 401(k)s — when you reach age 70½ or 72. These distributions also are subject to federal and state income taxes. (However, you don’t need to take RMDs from Roth IRAs.) Under the CARES Act, RMDs that otherwise would have to be made in 2020 from defined contribution plans and IRAs are waived. This includes distributions that would have been required by April 1, 2020, due to the account owner’s having turned age 70½ in 2019.

New charitable deduction tax breaks

The CARES Act makes significant liberalizations to the rules governing charitable deductions including: Individuals can claim a $300 “above-the-line” deduction for cash contributions made, generally, to public charities in 2020. This rule means that taxpayers claiming the standard deduction and not itemizing deductions can claim a limited charitable deduction. The limit on charitable deductions for individuals that is generally 60% of modified adjusted gross income (the contribution base) doesn’t apply to cash contributions made, generally, to public charities in 2020. Instead, an individual’s eligible contributions, reduced by other contributions, can be as much as 100% of the contribution base. No connection between the contributions and COVID-19 is required.

Far beyond

The CARES Act goes far beyond what is described here. The new law contains many different types of tax and financial relief meant to help individuals and businesses cope with the fallout.

© 2020

Understanding the contents of a will

Posted on August 13, 2019 by -

You probably don’t have to be told about the need for a will. But do you know what provisions should be included and what’s best to leave out? The answers to those questions depend on your situation and may depend on state law.

Basic provisions

Typically, a will begins with an introductory clause, identifying yourself along with where you reside (city, state, county, etc.). It should also state that this is your official will and replaces any previous wills. After the introductory clause, a will generally explains how your debts and funeral expenses are to be paid. The provisions for repaying debt generally reflect applicable state laws.

Don’t include specific instructions for funeral arrangements. It’s likely that your will won’t be accessed in time. Spell out your wishes in a letter of instructions, which is an informal letter to your family. A will may also be used to name a guardian for minor children. To be on the safe side, name a backup in case your initial choice is unable or unwilling to serve as guardian or predeceases you.

Specific bequests

One of the major sections of your will — and the one that usually requires the most introspection — divides up your remaining assets. Outside of your residuary estate, you’ll likely want to make specific bequests of tangible personal property to designated beneficiaries. If you’re using a trust to transfer property, make sure you identify the property that remains outside the trust, such as furniture and electronic devices. Typically, these items won’t be suitable for inclusion in a trust.

If your estate includes real estate, include detailed information about the property and identify the specific beneficiaries. Once you’ve covered real estate and other tangible property, move on to intangible property, such as cash and securities. Again, you may handle these items through specific bequests where you describe the property the best you can.

Finally, most wills contain a residuary clause. As a result, assets that aren’t otherwise accounted for go to the named beneficiaries, often adult children, grandchildren or a combination of family members.

Naming an executor

Toward the end of the will, name the executor — usually a relative or professional — who is responsible for administering it. Of course, this should be a reputable person whom you trust. Also, include a successor executor if the first choice is unable to perform these duties. Frequently, a professional is used in this backup capacity.

Cross the t’s and dot the i’s

Your attorney will help you meet all the legal obligations for a valid will in the applicable state and keep it up to date. Sign the will, putting your initials on each page, with your signature attested to by witnesses. Include the addresses of the witnesses in case they ever need to be located. Don’t use beneficiaries as witnesses. This could lead to potential conflicts of interest. Contact us with questions. © 2019

Is your nonprofit ready for a raffle?

Posted on January 31, 2019 by -

Raffles are popular fundraisers for not-for-profits. But they’re subject to strict tax rules. State laws on nonprofit-sponsored raffles can vary significantly, but nonprofits must comply with federal income tax requirements linked to unrelated business income, reporting and withholding. Unrelated business income tax Nonprofits are required to pay income tax on unrelated business income (UBI), and funds raised by raffles often qualify as such. This is particularly true if you routinely hold raffles and they aren’t related to your exempt purpose. But raffle income can be exempted from UBI tax if the raffle is conducted with “substantially all” volunteer labor. The IRS’s unofficial guideline is that 85% or more of the labor should be volunteer. If relying on this exemption, make sure you keep records to demonstrate your level of volunteer support. Reporting obligations Raffle winnings must be reported when the amount is $600 or more and at least 300 times the raffle ticket price. You can deduct the amount of the ticket when determining if the $600 threshold is met. For example, you sell $2 tickets, and your winner receives $1,000. Because the winnings ($998) are more than $600 and more than 300 times $2, you’re required to report them to the IRS. File Form W-2G, “Certain Gambling Winnings,” with the IRS and provide it to the winner to show reportable winnings along with the related income tax withheld, if any. The winner should provide you with his or her name, address and Social Security number to include on the filing. Withholding requirements You should withhold income tax from the winnings if the proceeds (the difference between the amount of the winnings and the amount of the wager) are more than $5,000. If the winnings are in the form of a noncash payment (for example, an automobile or artwork), proceeds are the difference between the fair market value of the item won and the wager amount. When the value of a noncash prize isn’t obvious, obtain a valuation before the drawing. For a noncash prize with a fair market value of more than $5,000 after deducting the wager, you have two options: The winner could reimburse you for the amount of withholding tax or you could pay the withholding tax on behalf of the winner. Handle with care Raffles can pay off for nonprofits — as long as your organization satisfies the tax and filing requirements. Contact us for more information and assistance.

© 2019

Are your volunteers putting your nonprofit at risk?

Posted on January 23, 2019 by -

Not-for-profits that direct and benefit from the actions of their volunteers can be held accountable if those individuals are harmed or harm others on the job. Lawsuits involving volunteers often arise from allegations of negligence or intentional misconduct, even when volunteers act outside the scope of their prescribed duties. Your organization needs to take steps to limit risk associated with unpaid workers.

Volunteers as employees
Your volunteer recruitment process should be almost as formal and structured as your paid employee hiring process. Develop job descriptions for open positions that outline the nature of the work, any required skills or experience and possible risks the job presents to the volunteer or your nonprofit. Once you have volunteer candidates, screen them according to the risks that might be involved based on your nonprofit’s mission, programs and likely volunteer activities. Some positions will pose few risks. For those, ask candidates to fill out an application and submit to an interview, and then check their work and character references. Positions that carry greater risks — such as work involving children, the elderly and other vulnerable populations, or direct access to cash donations — should involve more rigorous screening. This might include criminal history and credit report checks and verification of driver’s licenses, certifications or degrees.

Training and performance plans
Once volunteers are on board, provide training, supervision and, if necessary, discipline. Hold an orientation session to explain your nonprofit’s mission and policies. After volunteers have begun working for you, continue active supervision to verify that they understand expectations. To encourage professionalism and responsibility in your volunteers, consider devising performance plans that include goals — and rewards for achieving them. Such plans can also provide you with a framework to evaluate and dismiss volunteers who may be putting your nonprofit at risk by, for example, failing to follow safety procedures.

Role of insurance
No risk reduction plan is complete without insurance coverage. In addition to general liability, consider supplemental policies that address specific types of exposure such as medical malpractice or sexual misconduct. It’s also a good idea to have legal advisors periodically review policies and procedures pertaining to volunteers. Attorneys and financial advisors can help you determine whether your organization is doing all it can to reduce risks.

 

© 2018