News & Tech Tips

CLIENT ALERT: DOL “Overtime Rule” Moves into Final Stages

Kathleen Hargrove on March 28, 2016

This month The United States Department of Labor (DOL) moved forward with a proposed rule to extend overtime protections that could impact 5 million white collar workers.
The DOL sent the final version of its overtime rule, a revision to the Fair Labor Standards Act, to the White House Office of Management and Budget (OMB) on March 15. The OMB is expected to publish a final rule within 30-60 days.
If the overtime rule is finalized by the OMB as proposed, the salary threshold for white collar exemptions would be increased to $50,440 from the current threshold of $23,660.
The increased threshold was determined by the DOL based on the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers.  DOL used salary data from 2013 to determine the threshold ($47,892) and adjusted to the proposed $50,440 for 2016 implementation.
According to the DOL’s website, this exemption threshold has not been updated since 2004 and is due to be revised as “President Obama directed the Secretary of Labor to update the FLSA’s overtime pay protections and to simplify the overtime rules for employers and workers alike.”
Shortly after the final proposed rule was submitted to the OMB, Republican congressmen introduced the “Protecting Workplace Advancement and Opportunity Act” in both the House and Senate. This proposed legislation is intended to prevent the DOL overtime rule from being implemented, require economic climate considerations for the rule and impose additional restrictions on future changes to overtime rules.
Whalen & Company will continue to follow the proposed rule as it progresses.
We hope this information has been helpful to you.  If you have questions about how the proposed overtime rule affects your business, please contact your Whalen & Company representative.
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Victim of a disaster, fire or theft? You may be eligible for a tax deduction.

Kathleen Hargrove on March 23, 2016

deducting casualty lossesIf you suffer damage to your home or personal property, you may be able to deduct these “casualty” losses on your federal income tax return. A casualty is a sudden, unexpected or unusual event, such as a natural disaster (hurricane, tornado, flood, earthquake, etc.), fire, accident, theft or vandalism. A casualty loss doesn’t include losses from normal wear and tear or progressive deterioration from age or termite damage.

Here are some things you should know about deducting casualty losses:

When to deduct. Generally, you must deduct a casualty loss in the year it occurred. However, if you have a loss from a federally declared disaster area, you may have the option to deduct the loss on an amended return for the immediately preceding tax year.

Amount of loss. Your loss is generally the lesser of 1) your adjusted basis in the property before the casualty (typically, the amount you paid for it), or 2) the decrease in fair market value of the property as a result of the casualty. This amount must be reduced by any insurance or other reimbursement you received or expect to receive. (If the property was insured, you must have filed a timely claim for reimbursement of your loss.)

$100 rule. After you’ve figured your casualty loss on personal-use property, you must reduce that loss by $100. This reduction applies to each casualty loss event during the year. It doesn’t matter how many pieces of property are involved in an event.

10% rule. You must reduce the total of all your casualty or theft losses on personal-use property for the year by 10% of your adjusted gross income (AGI). In other words, you can deduct these losses only to the extent they exceed 10% of your AGI.

Have questions about deducting casualty losses? Contact Whalen & Company.

Copyright 2016 Thomson Reuters

3 income-tax-smart gifting strategies

Kathleen Hargrove on March 17, 2016

income tax on giftsIf your 2015 tax liability is higher than you’d hoped and you’re ready to transfer some assets to your loved ones, now may be the time to get started. Giving away assets will, of course, help reduce the size of your taxable estate. But with income-tax-smart gifting strategies, it also can reduce your income tax liability — and perhaps your family’s tax liability overall:

1. Gift appreciated or dividend-producing assets to loved ones eligible for the 0% rate. The 0% rate applies to both long-term gain and qualified dividends that would be taxed at 10% or 15% based on the taxpayer’s ordinary-income rate.

2. Gift appreciated or dividend-producing assets to loved ones in lower tax brackets. Even if no one in your family is eligible for the 0% rate, transferring assets to loved ones in a lower income tax bracket than you can still save taxes overall for your family. This strategy can be even more powerful if you’d be subject to the 3.8% net investment income tax on dividends from the assets or if you sold the assets.

3. Don’t gift assets that have declined in value. Instead, sell the assets so you can take the tax loss. Then gift the sale proceeds.

If you’re considering making gifts to someone who’ll be under age 24 on December 31, make sure he or she won’t be subject to the “kiddie tax.” And if your estate is large enough that gift and estate taxes are a concern, you need to think about those taxes, too. To learn more about tax-smart gifting, contact us.

Copyright 2016 Thomson Reuters
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