Raising the Bottom Line

Some Maryland Businesses Must Offer Paid Sick Leave Beginning February 11, 2018

Posted by David Goldner on Mon, Jan 22, 2018 @ 12:48 PM

paid sick leave in Maryland.jpg

Maryland business owners should take steps now to comply with the Maryland Healthy Working Families Act, which takes effect February 11, 2018.

The core provision of the Act that’s causing Maryland employers to scramble revolves around sick leave. Under the new law, which was hotly debated in the state legislature, some Maryland businesses must provide paid sick leave for employees.

What’s required by the new law?

Whether you are required to offer paid sick leave depends on the number of employees you employ.

Maryland Healthy Working Families Act paid sick leave.png

Under the new law, employees can earn one hour of sick leave for every 30 hours worked. Employees can earn a maximum of 40 hours (five work days) of sick leave each year.

Sick leave mandated by the Maryland Healthy Working Families Act can be used for an employee’s own illness, to get medical care for a family member, to care for a sick family member and for maternity/paternity leave.

What you should do now

Every business owner should review his or her sick leave policy immediately. If the current policy does not comply with the new law, it needs to be updated and communicated to employees before February 11.

Recordkeeping methods need attention as well. Payroll systems, for example, will need to account for the accrual and use of sick leave.

Consequences for failure to comply

There are stiff penalties for business owners who fail to comply with Maryland’s new sick leave law. Monetary fines and possible lawsuits filed by employees are a threat to businesses that don’t have compliant sick leave policies in place by February 11.

Want to learn more? Have questions? 

You can read the full Maryland Healthy Working Families Act here.

If you need help determining how your business is affected and the steps to comply, contact us here or call 800.899.4623.

subscribe to Gross Mendelsohn blog

Tags: David Goldner, Maryland, business owners

How to Get 20+ Pages of Data on the Maryland Construction Industry [Survey]

Posted by Steve Ball on Thu, Jan 18, 2018 @ 07:02 AM

2018 Maryland Construction Industry Survey Blog Promo.png

If you work in the Maryland construction industry, you know better than anyone that finding industry data can be tough. Luckily, we teamed up with the Maryland Construction Network to create a ten-minute survey that polls Maryland construction contractors like you on hot button topics you actually care about, including:

  • Best practices for recruiting and retaining key staff
  • Top strategies and tactics for getting new business
  • Top technology concerns for the construction industry
  • Fundamental online marketing strategies for increasing company visibility

Where Can I Get a Copy of the Survey Data?

To get a copy of the survey results, which will be compiled into an easy-to-read, 20+ page report, you must participate in the survey. The survey only takes ten minutes to complete, and the good news is that there are plenty of perks of being a survey participant.

What Do I Get If I Participate?

1. You’ll get a complete copy of the results in an easy-to-understand written report

Everyone who takes the survey gets a complete copy of the survey results. As a survey participant, you’ll be one of the few to receive an exclusive copy of the survey result report (i.e., if another contractor doesn’t participate, they won’t get a copy). This report will feature all of the results of the survey in an easy-to-understand format, meaning:

  • Lots of graphs and pictures
  • Down to earth explanations of what the data actually means to you
  • Practical advice on actions your company should take based on the survey’s findings
2. You’ll be entered to win a $500 Home Depot gift card

Everyone who completes the survey is automatically entered to win a $500 Home Depot gift card. So, why haven’t you started yet?

3. You’ll get an exclusive invitation to the survey result reveal seminar and Maryland Construction Network Direct Connect event

You know the construction industry is all about connections. As a survey participant, you’ll get an exclusive invitation to the result reveal seminar and Maryland Construction Network Direct Connect event. This means you’ll get an opportunity to hear the results first-hand from the construction industry experts who conducted the survey, and discuss them with other contractors like you and get some perspective on what other construction company owners and employees from across Maryland are thinking.

How Do I Take the Survey?

To start the survey, click here. The survey only takes ten minutes to complete. Make sure you complete and submit the entire survey by February 21, otherwise you’re going to miss out on all the perks (i.e., survey result report, gift card entry and exclusive seminar invite).

Maryland-construction-industry-survey

Tags: Steve Ball, construction, 2018 Maryland Construction Industry Survey

2018 Payroll Update

Posted by Conor Kregecz on Fri, Jan 12, 2018 @ 07:43 AM

payroll

This payroll update was compiled by the following members of Gross Mendelsohn's tax department: Dawn Ebeling, CPA; Conor Kregecz, CPA; and Paul Wallace, CPA, CFP(R).

Social Security and Medicare tax

As of January 1, 2018, the maximum amount of annual earnings subject to Social Security increases to $128,400 (from $127,200 in 2017). There is no limit on the amount of earnings subject to the Medicare tax.

The maximum Social Security tax to be deducted from an employee’s compensation during 2018 will be $7,960.80 (6.2% x $128,400).

The employer Social Security and Medicare tax rate will remain unchanged at 6.2% and 1.45%, respectively. The employee Medicare tax rate will remain at 1.45%, except for high wage earners.

High income taxpayers who have wages, compensation or self-employment income in excess of certain filing status thresholds ($250,000 if married filing jointly, $125,000 if married filing separately, and $200,000 for all others), will be subject to an additional Medicare tax of .9%. For withholding purposes, wages in excess of $200,000, regardless of the filing status, will be taxed at a tax rate of 2.35% (1.45% + .9%). Only employees are subject to this additional Medicare tax.

Income tax withholding

Employers should implement the 2018 withholding tables as soon as possible but no later than February 15, 2018. Use the 2017 withholding tables until you are able to implement the 2018 withholding tables. To view the 2018 tables, click here.

There will be no change in the Maryland (MD), Delaware (DE), Pennsylvania (PA) or Virginia (VA) withholding tables. The District of Columbia (DC) has adjusted withholding tables due to an increase in the personal exemption amount.

MD’s maximum individual income tax rate remains at 5.75%. MD local county rates are unchanged except for Cecil, which increases from 2.80% to 3.00%.

DE, DC and VA’s maximum individual income tax rates will remain at 6.6%, 8.95% and 5.75%, respectively. PA’s individual income tax rate will remain at 3.07% for 2018.

Effective January 1, 2018, the federal tax withholding rate on supplemental wages (e.g., bonus payments) exceeding $1 million during a calendar year drops to 37% (from 39.6% in 2017). The rate for supplemental wages up to $1 million is subject to a flat rate increases from 25% to 28%.

Unemployment taxes

The federal unemployment tax (FUTA) deposit rate is .6% for 2018. The federal taxable wage base will remain at $7,000. PA taxable wage base will increase to $10,000 (from $9,750 in 2017). Unemployment taxes are paid by the employer. PA employees are responsible for an additional withholding of .06% of total wages (down from .07% in 2017

State unemployment tax rates vary according to the employer’s experience and are sent to the employer. State 2018 wage bases and employer 2017 rates are as follows:

                Wage Base          2017 Rates

MD         $  8,500                 from .3% to 7.5%

DE          $16,500                 from .385% to 8.285%

DC         $  9,000                 from 1.8% to 7.2%

PA          $10,000                 from 2.643% to 11.262%

VA          $  8,000                 from .13% to 6.23%

In the event you did not receive a 2018 MD unemployment insurance tax rate, it is available by calling 1.800.492.5524. Payment option plans are available for MD employers in economic hardship.

MD and PA require all employers to file quarterly contribution reports electronically. DC employers with at least five employees are required to submit reports electronically.

The minimum threshold amount for quarterly FUTA tax deposits remain at $500.

Tax deposits

All federal tax deposits (employment tax, excise tax, corporate income tax, etc.) must be made by electronic funds transfer (EFT). Generally, EFTs are made using the “Electronic Federal Tax Payment System” (EFTPS). Employers may arrange for their financial institutions to initiate a same-day tax wire payment on the employer’s behalf. De Minimis deposit rules still apply for employment taxes of less than $2,500 for a return period. Those who fail to use EFTPS will be subject to a 10% penalty.

State EFT thresholds for tax payments are as follows: MD - $10,000 or more; DC - $5,000 or more; PA - $1,000 or more; DE and VA require EFT for payment of all state taxes. MD, DC, DE and PA allow online processing of returns. VA requires every employer to file all withholding tax returns and payments electronically.

Employers should receive notification from the IRS and state taxing authorities as to the frequency of their depository requirements. Semi-weekly depositors have three banking days to make a deposit. Monthly depositors’ due dates are the 15th day of the next month for DE, MD, PA and the IRS, the 20th for DC and the 25th for VA. Quarterly depositors may remit accumulated tax with the quarterly tax returns which are generally due the last day of the month following the end of each calendar quarter. MD and DC’s quarterly returns are due the 15th and 20th day of the following month, respectively. DE’s eighth-monthly depositors’ payments are due within three working days after the close of the eighth-monthly period. Eighth-monthly periods end on the 3rd, 7th, 11th, 15th, 19th, 22nd, 25th and the final day of every month.

Employers can view deposit dates and sign up for email reminders at the IRS Online Tax Calendar through the IRS website www.tax.gov/calendar. IRS Direct Pay is available at www.irs.gov/payments.

Accelerated deposit dates are required for federal tax accumulations of $100,000, which are due the next business day. VA employers must also remit VA withholding within three days of the date withheld. MD employers who withheld $15,000 or more during 2017 and currently have accumulated $700 or more in withholding tax must make a deposit within three business days after the payroll pay date. Employers who are allowed to file federal withholding tax returns on a monthly basis may apply to MD for a waiver of the three-day rule described above.

Wage statements

Federal rules require employers filing 250 or more W-2 forms to file electronically. DE and PA follow the federal threshold and MD’s requirements remain at 25 or more. MD and PA allow withholding statements on magnetic media or other machine-readable formats. VA requires e-filing for all employers.

Employers required to file at least 50 W-2 forms must report the aggregate cost of employer-sponsored health insurance coverage on the 2017 W-2 form. The IRS has granted exemption to companies that file less than 50 W-2 forms until further notice. Employers with more than 50 full-time employees but less than 250 did not previously have to file reports in regard to health insurance.

All federal and state Form W-2s are now due to the taxing authorities by January 31, 2018.

Employers who e-file W-2 Forms will have a new 16-digit alphanumeric verification code for Box 9 to reduce tax fraud and identity theft. This new box appeared on the 2016 Form W-2 but did not have any designation until 2017.

Information return penalties

Penalty amounts for failing to provide timely, complete and correct information returns (W-2 and Form 1099) range from $50 - $260 per return with a maximum of $3,218,500 ($1,072,500 for small businesses).

Additionally, payers are required to acknowledge their compliance with information return filings on their business income tax returns.

Minimum wage

The federal minimum wage rate is $7.25 per hour for employees covered by the Federal Fair Labor Standards Act. PA and VA follow the federal law. DE’s rate remains at $8.25. Current and future hourly minimum wage rate for MD and DC are as follows:

 

7/1/17

7/1/18

MD

$9.25

$10.10

DC

$12.50

$13.25

Effective October 1, 2017, the minimum wage for Prince George’s County of Maryland increased to $11.50/hour.

New hire forms

On July 17, 2017, the United States Citizenship and Immigration Services (USCIS) released an updated version of the Form I-9 for Employment Eligibility Verification, with a mandatory implementation of September 18, 2017

Using an old form after September 18, 2017 and beyond would subject the company to fines and/or penalties.

Online self-service portals

Questions?

If you have any questions, contact us online or call 800.899.4623.

subscribe to Gross Mendelsohn blog

Tags: Paul Wallace, payroll, Dawn Ebeling

Tax Reform Has Family Law Attorneys Rethinking Financial Strategies for Divorce Clients

Posted by Richard Wolf on Fri, Jan 05, 2018 @ 02:12 PM

tax reform impact on divorce and alimony.jpg

Now that the Tax Cuts and Jobs Act has been signed into law, we can start to examine its impact on family law attorneys and their divorce clients.

As a result of the sweeping tax reform, family law attorneys will need to reconsider the financial strategies they use for their divorce clients.

Repeal of the Tax Deductibility of Alimony

tax-seminar-divorce-attorneys

The new tax law will dramatically impact a pillar of divorce across the United States: the tax deductibility of alimony.

Under the new tax law, for any divorce or separation agreement signed after December 31, 2018, spousal support payments are not deductible by the payor spouse and are not included in the income of the recipient spouse. As we reported in our earlier blog post, the initial House bill proposed that the change go into effect one year earlier.

Another change from the initial House bill is that the signed law will not affect the tax deductibility of any divorce or separation agreement executed on or before December 31, 2018 and modified after such date, unless the modification expressly provides that the new amendments under Section 11051 apply. In essence, tax deductible alimony is “grandfathered in” for all couples divorced before 2019.

The basic impact of the loss of the alimony deduction is fairly easy to forecast:

Spouses receiving alimony will be asked to accept less money than previously expected as the payments are no longer subject to tax, and the cost of paying alimony will increase as it will be taxable to the paying spouse.

Since alimony is often a valuable tool in divorce negotiations, eliminating the tax deduction may limit the ability of attorneys and judges to find common ground in reaching a settlement.

Since the new law has shifted the tax burden to the paying spouse, who typically has a higher marginal tax rate, it might actually make alimony negotiations more difficult and contentious.

Attorneys and couples contemplating or undergoing divorce need to be aware of – and closely monitor future regulations – this change in the deductibility of alimony.

Higher Business Valuations Likely

In addition, as we discussed in an earlier blog post, the Tax Cuts and Jobs Act might result in higher business values of closely-held companies, which often are one of the biggest assets in a marital estate.

Reconsider Your Financial Strategies for Divorcing Clients

Our team of litigation support professionals can help family law attorneys form financial strategies for their divorcing couples in light of the new tax law. Contact us online or call 800.899.4623 for help.

Tags: tax, forensic accounting, divorce, litigation support, attorneys, Richard Wolf

5 Mistakes Nonprofits Make on Their Form 990 That Send Donors Running

Posted by Lisa Johnson on Thu, Jan 04, 2018 @ 06:57 AM

stop-sign.jpg

When it comes to fundraising, you may be surprised that some donors, and especially those with deep pockets, could be taking a long look at your nonprofit’s IRS Form 990 before signing their first (or hundredth) donation check.

To encourage transparency, tax-exempt nonprofits are required to disclose their three most recent annual information returns like Form 990s and other tax documents, which can be found publically on websites like GuideStar, and have their Form 1023 available for inspection. This public disclosure makes it easier for donors to get a realistic picture of an organization’s business and financial status before donating.

Disclosing your organization’s Form 990 means your nonprofit must ensure that the documentation is accurate and know the red flags that donors may be looking out for on your tax returns.

Here are just a few mistakes your nonprofit may be making on its Form 990.

1. Your mission statement needs a makeover

Your nonprofit’s Form 990 provides your organization with an opportunity to highlight your mission statement and major program service accomplishments. This is a marketing opportunity for your nonprofit to tell its story and share your achievements. If your mission and program service accomplishments are vague or inarticulate, donors may not understand your nonprofit’s goals and programs, which could make a donor less likely to donate to your organization.

990-mission



2. Your nonprofit’s executives are receiving excessive compensation

The board of directors is responsible for establishing and ensuring the compensation of your nonprofit’s executives is fair and reasonable. Compensation arrangements for all officers, directors, trustees and key employees should be approved in advance by your governing board or a committee of the board and should be supported by comparability data.

Also, the process your nonprofit uses to approve executive compensation must be described in your Form 990. Donors may evaluate both the process used to determine and the reasonableness of the compensation.

990-compensation



3. You don’t have a conflict of interest policy

A conflict of interest policy encourages greater transparency and is perhaps one of the most important policies a nonprofit board can adopt. Donors will often review an organization’s Form 990 to identify:

  • Whether your organization has a conflict of interest policy in place
  • If there is a conflict of interest policy in place, whether your organization’s policy requires board members and senior management to annually disclose any real or potential conflicts
  • The process your nonprofit uses to manage any conflicts.

990-conflict



4. You don’t demonstrate that oversight is a priority for your organization

Your Form 990 contains a section on governance and your nonprofit’s policies, which can help demonstrate your organization’s commitment to strong oversight. A donor may evaluate the size of the governing board as well as how many board members are independent. Donors may also look to see if the organization has whistleblower and document retention policies as well as whether your Form 990 is reviewed by the board or designated committee prior to filing.

990-oversight



5. Your overall budget could use some trimming

The breakdown of expenses – whether they are management and general expenses or fundraising expenses – in your nonprofit’s overall budget can come under scrutiny by donors. The trouble is, every donor will perceive your expenses in different ways.

Some donors might think management and general expenses indicate inefficiency while others might see those same expenses as necessary for a nonprofit to have strong internal controls and well-managed risks. If you haven’t already, it’s important for your nonprofit to develop a policy that accurately allocates expenses between program, management and general; and fundraising areas and to be as transparent as possible in how the costs are allocated.

990-budget



Get more donors with better fundraising

To learn more about how your organization can be successful in getting new donors, improve your fundraising efforts and the techniques to get you there, check out our free on-demand webinar, “Secrets of Successful Nonprofit Fundraising,” presented by fundraising expert Vince Connelly. To start watching the webinar now, click here.

NPO Webinar January 2017 (body - small).png

Tags: tax, Lisa Johnson, Form 990, nonprofit, fundraising

Some Health Saving Accounts and High-Deductible Health Insurance Plans May No Longer Exist in Maryland as of January 1, 2018

Posted by Scott Handwerger on Thu, Dec 28, 2017 @ 03:13 PM

dead end sign

Health savings accounts (HSAs) and high-deductible health insurance plans (HDHPs) are in trouble in Maryland. In 2016, The Contraceptive Equity Act was enacted in Maryland, an act which stipulates that male contraceptive services (vasectomies) are required to be covered as a preventive service. As a preventive service, a deducible or cost-sharing cannot be required.

Despite this, HSAs and HDHPs cannot cover benefits before the deductible is met unless that benefit falls under a list of IRS-approved preventive care services, of which vasectomies aren’t listed.

However, because Maryland’s Contraceptive Equity Act requires vasectomies to be covered as a preventive services and the IRS does not list vasectomies as a preventive service, HSAs and HDHPs in Maryland will continue to charge a deductible, causing these plans to be in violation of The Contraceptive Equity Act. This means these plans may no longer be available in Maryland as of January 1, 2018 and contributions made to these plans may be disallowed or subject to penalty.

Learn more about why HSAs and HDHPs are at risk, how Maryland is trying to fix the issue and when the fix could take effect in this update from The Maryland Association of CPAs.

Questions?

At Gross Mendelsohn, we can help with any questions you have about your organization’s HSA and HDHP. For help, contact us here or call 800.899.4623.

Tags: Scott Handwerger, health insurance

Here's How the New Tax Reform Law Will Affect You and Your Business

Posted by Leonard Rus on Wed, Dec 27, 2017 @ 08:29 AM

cash

The new tax reform law, commonly called the “Tax Cuts and Jobs Act” (TCJA), is the biggest federal tax law overhaul in 31 years, and it has both good and bad news for taxpayers.

Below are highlights of some of the most significant changes affecting individual and business taxpayers. Except where noted, these changes are effective for tax years beginning after December 31, 2017.

Individuals

  • 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% — through 2025
  • Near doubling of the standard deduction to $24,000 (married couples filing jointly), $18,000 (heads of households), and $12,000 (singles and married couples filing separately) — through 2025
  • Elimination of personal exemptions — through 2025
  • Doubling of the child tax credit to $2,000 and other modifications intended to help more taxpayers benefit from the credit — through 2025
  • Elimination of the individual mandate under the Affordable Care Act requiring taxpayers not covered by a qualifying health plan to pay a penalty — effective for months beginning after December 31, 2018
  • Reduction of the adjusted gross income (AGI) threshold for the medical expense deduction to 7.5% for regular and AMT purposes — for 2017 and 2018
  • New $10,000 limit on the deduction for state and local taxes (on a combined basis for property and income taxes; $5,000 for separate filers) — through 2025
  • Reduction of the mortgage debt limit for the home mortgage interest deduction to $750,000 ($375,000 for separate filers), with certain exceptions — through 2025
  • Elimination of the deduction for interest on home equity debt — through 2025
  • Elimination of the personal casualty and theft loss deduction (with an exception for federally declared disasters) — through 2025
  • Elimination of miscellaneous itemized deductions subject to the 2% floor (such as certain investment expenses, professional fees and unreimbursed employee business expenses) — through 2025
  • Elimination of the AGI-based reduction of certain itemized deductions — through 2025
  • Elimination of the moving expense deduction (with an exception for members of the military in certain circumstances) — through 2025
  • Expansion of tax-free Section 529 plan distributions to include those used to pay qualifying elementary and secondary school expenses, up to $10,000 per student per tax year
  • AMT exemption increase, to $109,400 for joint filers, $70,300 for singles and heads of households, and $54,700 for separate filers — through 2025
  • Doubling of the gift and estate tax exemptions, to $10 million (expected to be $11.2 million for 2018 with inflation indexing) — through 2025

Businesses

  • Replacement of graduated corporate tax rates ranging from 15% to 35% with a flat corporate rate of 21%
  • Repeal of the 20% corporate AMT
  • New 20% qualified business income deduction for owners of flow-through entities (such as partnerships, limited liability companies and S corporations) and sole proprietorships — through 2025
  • Doubling of bonus depreciation to 100% and expansion of qualified assets to include used assets — effective for assets acquired and placed in service after September 27, 2017, and before January 1, 2023
  • Doubling of the Section 179 expensing limit to $1 million and an increase of the expensing phaseout threshold to $2.5 million
  • Other enhancements to depreciation-related deductions
  • 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, also commonly referred to as the domestic production activities deduction or manufacturers’ deduction — effective for tax years beginning after December 31, 2017, for noncorporate taxpayers and for tax years beginning after December 31, 2018, for C corporation taxpayers
  • New rule limiting like-kind exchanges to real property that is not held primarily for sale
  • New tax credit for employer-paid family and medical leave — through 2019
  • New limitations on excessive employee compensation
  • New limitations on deductions for employee fringe benefits, such as entertainment and, in certain circumstances, meals and transportation

More to consider

This is just a brief overview of some of the most significant TCJA provisions. There are additional rules and limits that apply, and the law includes many additional provisions. Click here to contact our tax department online or call 800.899.4623 to learn more about how these and other tax law changes will affect you in 2018 and beyond.

subscribe to Gross Mendelsohn blog

Tags: Manufacturing & Distribution, individual tax planning, Leonard Rus, tax, healthcare, nonprofit, construction, business tax planning

Nonprofit Investment Tips: 4 Ways to Ensure Your Nonprofit Keeps on Giving

Posted by Jeff Johnson on Wed, Dec 20, 2017 @ 08:59 AM

gift box

When it comes to investing, nonprofits often struggle to invest their hard earned donation dollars. Not only do organizations need the right knowledge and understanding to make sound investments, but many nonprofits are paralyzed (and understandably so) by the idea of potentially losing charitable funds due to fluctuations in the market.

The reality is, your nonprofit was established to help make the world a better place. Whatever your mission – assisting students, helping the disadvantaged, saving pets, fostering scientific research – all the investing decisions your nonprofit makes must be made in order to serve your philanthropic goals while still prioritizing the preservation of operating costs and capital. In this sense, you must make thoughtful, informed investments that provide your nonprofit a chance to grow while also protecting your organization’s financial viability.

Here are four essential tips to keep your organization healthy and growing for generations to come:

1. Understand your fiduciary obligations

Not only does your board of directors have a fiduciary responsibility to protect assets and further your mission, but increased regulatory scrutiny has placed additional requirements on nonprofit organizations. Whether it’s classifying your endowment funds, establishing a prudent spending policy or having defined document-retention policies, understanding your responsibilities can help you avoid putting your nonprofit at risk.

2. Determine your objectives

A sound approach to investing starts with identifying your nonprofit’s objectives, including the adoption of an investment policy and setting appropriate risk tolerance and asset allocation ranges. These objectives will serve as a roadmap to meeting your investment and financial objectives.

Get investment news and insights on GGM Wealth Advisors' blog. Check it out here!

Additionally, a clear investment strategy will outline a reasonable set of assumptions and expected returns, allowing your board and/or committee to maintain their focus on executing your nonprofit’s mission.   

3. Engage an investment manager

Given the range of complexities and unique investing requirements, many nonprofits hire a professional investment manager to maintain objective oversight, execute the investment strategy, monitor market values, provide advice and handle the day-to-day investment related activities of their endowment. 

4. Review and control risk

At the bare minimum, your nonprofit should meet with its investment manager on an annual basis. Risk control should always be a significant consideration, and simply diversifying your assets may not be enough. Your advisor should have well-defined procedures and processes to control portfolio risk and be able to explain how and why investment decisions have been made. Preserving and growing your nonprofit’s portfolio is an essential step towards ensuring your organization is able to continue giving to and serving your community.

How can we help?

Our integrated team of nonprofit accountants and investment advisors can assist you in developing a comprehensive financial roadmap that will help further your mission. Any questions? Contact us online or call 800.899.4623.

About Jeff Johnson

Jeff JohnsonJeff is the managing director and partner at GGM Wealth Advisors, an independent SEC Registered Investment Advisor and investment arm of Gross, Mendelsohn & Associates. He is a member of the firm’s investment committee and has over 18 years of financial industry experience. Learn more about Jeff.

 

 


GGM Wealth Advisors' Blog

Tags: nonprofit, wealth management, Jeff Johnson, GGM Wealth Advisors

5 Ways A Financial Expert Can Make Your Divorce Case Stronger

Posted by Richard Wolf on Tue, Dec 19, 2017 @ 08:57 AM

financial expert in divorce.jpg

I hear it from family law attorneys frequently: “My client doesn’t own a business, so I really don’t need a financial expert for this case.”

In cases where one or both parties own a business, it’s a no brainer to work with a Certified Valuation Analyst. But even when neither party owns a business, a qualified financial expert with experience handling complex financial issues can assist you in your divorce case.

Consider a few scenarios where a financial expert could help support your case:

  • How many times have you analyzed various spousal support payments and used a generic tax rate to determine the tax ramifications?
  • Wouldn’t it be helpful to show the judge in clear terms the tax effect of the spousal support payments on both parties?
  • Would it be helpful to show the judge that a $1,000/month increase in spousal support would only result in an increase of $600/month in disposable income to your client?

Let’s look at five ways that a financial expert can support family law attorneys throughout the divorce process.

1. Coordinate Financial Information

In many divorces, one of the most difficult challenges can be gathering financial information, especially when one spouse is more knowledgeable about the finances and investments than the other spouse. Your client might only have a basic knowledge about the family’s finances and may need help understanding their current financial picture.

A good financial expert can help attorneys gather, understand, and organize the financial information received from your client, and ultimately help paint a financial landscape of the couple.

2. Prepare Financial Statement for Client

Pursuant to Maryland Rule 9-202, both parties might be required to file a financial statement based on monthly income and expenses. A well prepared and accurate financial statement goes a long way to show the court whether a party’s testimony is credible. As a result, you should be careful when preparing the financial statement.

Failure to accurately complete the financial statement may result in your client not receiving the support they are requesting. In addition, it may leave your client vulnerable to attack during cross examination. For example, if the financial statement states that your client spends $200 a month on vacations, but the supporting documents show that the amount spent was substantially less, the opposing side will have the opportunity to show that the financial statement, which was filed under the penalties of perjury, is full of erroneous figures and that your client’s testimony should not be believed.

In addition to helping clients prepare their financial statement, we have also examined the opposing side’s financial statement. In one instance, we identified numerous mathematical errors, as well as inflated expenses, in the wife’s financial statement. This information was great ammunition for the husband’s attorney to reach a settlement and avoid a costly trial.

3. Uncover Hidden Assets

financial expert in divorceWhen a spouse manipulates income, a forensic accountant can review financial documents and accounts to establish a trail of assets, which may identify hidden assets.

Many clients are convinced that their spouse is hiding assets. There are several behaviors that raise red flags as to the possible existence of hidden assets, including when one spouse:

  • Has exclusive control of all the financial accounts
  • Intentionally provides incomplete responses to inquiries and discovery requests
  • Lives a lifestyle in excess of reported income
  • Has a sudden decline in income
  • Makes large transfers or payments from bank accounts

4. Income Determination

In addition to hiding assets, many spouses will under report income on tax returns and/or financial statements in the year or years preceding a divorce.

Because of this lower income, the amount of spousal support and/or child support might be lower than what your client is entitled to receive.

Determining a spouse’s income is not always an easy task. It gets even more complicated when one or both of the spouses owns a business. When one spouse owns and controls a business, there is considerable opportunity for them to intermingle business and personal expenses. In addition, they may have created various income streams that the other spouse might not be aware of.

A financial expert with forensic accounting experience can review financial data and accounts to help you determine a spouse’s income.

5. Calculate Post-Judgment Obligations

In some divorces, there are certain assets where division is deferred until some future event. For example, one party might get a percentage of the gain if an asset is sold within five years of the divorce. Some property settlement agreements contain clauses that require recalculation of spousal support and/or child support on an annual basis due to unique circumstances.

Having a financial expert assist in these post-judgment (or post-settlement) obligations can go a long way if the parties end up back in court.

We assisted one client in calculating spousal support and child support pursuant to his property settlement agreement. The client received a K-1, which detailed his income and the amount of distributions. He was also entitled to various reductions for mandatory business expenses pursuant to case law. His wife’s expert, however, did not take into account these reductions, and we were able to save him a considerable amount in spousal support and child support.

Need a Financial Expert to Help Support Your Case?

Even when a business valuation isn’t needed in your divorce case, a financial expert can be an extremely useful member of your team. They will work in close collaboration with you to create a successful financial result for your client.

Our Forensics & Litigation Support Group can help. Contact us online or call 800.899.4623.

divorce whitepaper for family law attorneys

Tags: forensic accounting, divorce, litigation support, attorneys, Richard Wolf

Did Your Maryland Nonprofit’s Exemption Certificate Expire?

Posted by Ernie Paszkiewicz on Wed, Dec 13, 2017 @ 03:42 PM

clock.jpg

If your Maryland nonprofit has an exemption certificate, it may have expired on September 30, 2017. An exemption certificate is a wallet-sized card with the holder’s eight-digit exemption number. Exemption cards are granted to qualifying nonprofit organizations including:

  • Religious organizations
  • Educational and charitable organizations
  • Cemeteries
  • Credit unions
  • Veterans organizations
  • Volunteer fire departments or rescue squads

An exemption card allows an organization to purchase tangible personal property tax-free. This card shouldn’t be confused with a resale certificate, which is used by manufacturers, wholesalers and retailers to purchase tax-free items to sell.

How Do I Renew My Card?

Information regarding the renewal application for exemption certificates was mailed to organizations with cards expiring on September 30, 2017 in May 2017, with a renewal application deadline of August 1, 2017. If your renewal deadline has already passed, your organization should submit your application for renewal as soon as possible. Certificates must be renewed every five years.

For answers to common questions in the renewal process, check out this FAQ on the State of Maryland’s website.

What’s Next?

At Gross Mendelsohn, we can help with your exemption application and other nonprofit accounting needs. For help, contact us here or call 800.899.4623.

subscribe-nonprofit-blog

Tags: tax, Ernie Paszkiewicz, nonprofit