A Review of the Tax Implications of Investing in Mutual Funds
Mutual funds are an attractive investment option, especially for people who are looking for a low-maintenance, long-term way to participate in the securities markets. These funds are managed by professionals who should be well-qualified to judge which securities are attractive bets. Mutual funds also make it easier to maintain a diversified portfolio, which can reduce risk…
The ABCs of Scholarship Tax Rules
Good news: You just found out that your high school senior son or daughter will be receiving a sizeable scholarship at a prestigious university next fall. But what are the tax consequences? In most cases, scholarships awarded to students are exempt from federal income tax, assuming certain conditions are met. Comparable rules apply to fellowships for…
Are You Ready for Possible State Minimum Wage Increases?
In today’s tight labor market, many employers have been raising wages substantially to maintain operations. That’s most evident in the leisure and hospitality sector, where average hourly wages rose 12% for the year ending October 2021. For many organizations, getting by with paying minimum wage is generally a distant memory. That’s particularly true where the state’s…
Recent IRS Guidance Addresses the Taxability of PPP Loan Forgiveness
Businesses that received Paycheck Protection Program (PPP) loans can apply for forgiveness once all loan proceeds for which they are requesting forgiveness have been used. On November 18, 2021, the IRS issued a series of three Revenue Procedures addressing the tax effects when a PPP loan is forgiven. Here’s a brief rundown of each. Revenue Procedure…
Navigating the Tax Angles for ETFs
Exchange traded funds (ETFs) are hot. Last year, $507.4 billion flowed into ETFs listed in the United States, according to Statista, a provider of market and consumer data. Net assets held by ETFs totaled roughly $5.4 trillion in 2020 — up from less than $1 trillion a decade earlier. The trend has apparently continued with a…
What Gig Work Means for Your Taxes
By Patrick Crosby, Tax Supervisor The Rise of the Gig Economy With the steadily increasing cost of living, a dramatic shift to remote work arrangements, and advances in digital-based technology, many Americans are turning to gig work to earn supplemental income. For some, it has become their main source of income. The IRS defines the…
Public Support Test Basics
The Internal Revenue Code’s public support test provisions use mathematical income tests measured over an aggregate 5-year computation period to determine the tax status of public charities and private foundations. These provisions are particularly important for public charities which are required to have at least one-third of their revenue come from the public, government sources,…
Public Support Tests: Why You Might Prefer Public Charity to Private Foundation?
While the Internal Revenue Code Section 501(c) lists 29 different types of nonprofit organizations, most tax-exempt organizations are those described in Section 501(c)(3) and have a charitable, religious, educational, or scientific purpose. Every 501(c)(3) tax-exempt organization must be further classified as either a public charity or a private foundation. Some types of charities, such as…
Public Support Tests: How a Public Charity is Defined Under Sec. 509(a)(2)?
The IRS has four categories under Sec. 509 that allow an organization to be a public charity, but the two most common are 509(a)(1) and 509(a)(2). This article focuses on (a)(2) public charities, whose public support test calculations present a few more complexities than that of an (a)(1) public charity. The test to classify an…
Public Support Tests: Does Your Public Charity Pass the Section 509(a)(1) Test?
To be a public charity, an organization must meet one of the Internal Revenue Code (Code) Section 509(a) tests. This article focuses on the first listed test, Section 509(a)(1), and the ramifications for a charitable organization described in this section. However, to understand 509(a)(1), it is helpful to understand the alternative 509(a)(2) test. Please note…