Posts by Brent Ardit, CPA:
- If you turned 65 during 2014, your standard deduction increased by $1,550. This means that you can claim $7,750 instead of the $6,200 standard deduction allowed for those younger than 65.
- For the next three years, taxpayers older than 65 are eligible to receive a reduced phase out of their medical expenses. Those who are older than 65 can deduct qualifying medical expenses to that exceed 7.5 percent of their adjusted gross income. Those younger than 65 can deduct qualifying medical expenses that exceed 10 percent of their adjusted gross income.
- Self-employed individuals who have Medicare Part B, Part D or supplemental Medicare policies are eligible to claim an above-the-line deduction for these costs.
- This newer guidance effectively consolidates eight federal circulars into one, which makes guidelines, cost principles, and audit requirements easily accessible. Having one “Super Circular” to thumb through – even though it tops 100 pages – is a welcome change to grant seekers, grant recipients and awarding agencies.
- Now that the grant guidance is easily accessible and transparent, the OMB anticipates increased competition among agencies and organizations that are eligible for monetary assistance.
- New provisions have established a higher threshold for an A-133 audit. The threshold for an A-133 audit is now $750,000 – which is higher from the previous threshold of $500,000. This means that not-for-profit organizations that bring in less than $750,000 annually are not required to complete an A-133 audit, which will provide some relief to about 5,000 non-federal organizations. This doesn’t mean the OMB will stop monitoring the federal aid that is distributed to these organizations, the OMB says 99.7 percent of aid awarded to organizations and agencies will still be subject to single audit oversight.
- The Super Circular significantly reforms how organizations and agencies will maintain their cost principles. Specifically, in its guidance, the OMB places a greater emphasis on internal controls. The Super Circular effectively defines what organizations and agencies can consider indirect costs, administrative salary direct costs, compensation, and costs associated with materials and supplies.
- The deadline for organizations and government agencies to comply with the OMB’s reforms is Dec. 26, 2014.
If you’re a newly retired American, then you are embarking on a new, exciting phase of your life. For many of you, increased travel, spending more time with grandchildren or pursuing a new hobby may be ways to enjoy this new journey.
But before you pack up your things and hop that next plane to Florida, here are three tips to help you avoid the retirement culture shock.
1. Taxes Don’t Vanish At 65
When you were an employee, your taxes were likely withheld from your paycheck. Today, however, is a new day. As a retiree, you no longer have a paycheck from which taxes can be withheld. But there are a few things you can do to make sure you won’t get hit with a large tax bill in April. For example, if you receive a regular pension payment or an annuity, consider withholding your tax payments from those. You also have the option of simply making quarterly estimated tax payments if withholding is not an option.
2. Transfer Your Pension To Avoid Added Tax Cost
If you do have retirement income from a pension plan, make sure to structure the transfer of your pension into an IRA as a direct rollover to avoid an additional tax. Basically, you want to make sure that the check is made out to your IRA and not directly to you, which will ensure that the funds are deposited into your IRA instead of your personal bank account. If you don’t structure your pension plan to disperse your money in this way, the company responsible for your pension payments is required to withhold 20 percent of the funds for the Internal Revenue Service (IRS). When this happens, the IRS will likely see fit to assess a tax to this 20 percent, effectively shrinking your retirement nest egg.
3. Don’t Miss Exclusive Tax Benefits
Retirees are eligible to receive a few nice tax incentives – perhaps to offset your new responsibility of paying your own quarterly estimated taxes and transferring your pension plan payments. Either way, these tax breaks are nothing to grumble about. Here are three tax facts to get you started:
You have spent so many years putting in long hours, stressing over money and putting your wants and needs second. Retirement is your time. Make sure you are in control of your finances – and your future. Email Rea & Associates to learn how to make your money go further in retirement.
By Brent Ardit, CPA (Cambridge office)
When it comes to maintaining a high level of transparency and accountability, not-for-profit organizations face a lot of challenges. Not only does the community look to your organization to provide high-quality services and resources, the government expects your organization to utilize federal funding responsibly. The ability of not-for-profit organizations to secure federal assistance is critical, which is why industry leaders are seeking more clarity pertaining to a wide range of recent reforms made to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. These reforms are scheduled to take effect the Dec. 26, 2014. Here’s some insight into what you can expect moving forward.
Super Circular Reforms
Last December, the Office of Management and Budget (OMB) passed sweeping reforms to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, also known as the Super Circular or the Omni Circular. The goal for these reforms is to help the federal government streamline its guidance concerning administrative requirements while strengthening the oversight of federal funds. By ensuring compliance of these reforms, the OMB hopes to reduce financial waste, fraud and abuse.
Whether you’re the director of an organization that seeks federal grants and/or assistance, an accountant who serves such an organization, or a citizen who benefits from the organization’s government funding, the Super Circular is a big deal. The federal government awards more than $500 billion every year, and it is the OMB’s responsibility to ensure that every dollar spent is a good use of taxpayer funds.
What Do Super Circular Reforms Mean For You?
For example: If you have never applied for aid in the past, but you think your organization or government agency may be eligible for federal assistance, you can now easily find out. More agencies and organizations are expected to take advantage of the fact that these guidelines are easily accessible, which means there will be more people vying for government money.
A comprehensive list of federal assistance programs is available in the programs tab of the Catalog of Federal Domestic Assistance (CFDA) website. This site not only provides a list of programs and grants available, it provides key information about what is required to apply and qualify for federal assistance.
Please Note: If your fiscal year ends in December, the $750,000 single audit threshold won’t go into effect until your Dec. 15, 2015 audit. And if your fiscal year ends in June, it won’t go into effect until December 30, 2016.
For example: While the salaries of your administrative and clerical staff may have been treated as indirect costs in the past, the OMB says that it may now be more appropriate to consider them as direct costs if the work performed is specifically outlined within the grant-funded project or initiative.
Because the reform-laced Super Circular was written with the goal of helping organizations and agencies apply for aid, manage funds and prepare for audits, it is anticipated that the OMB will succeed in its efforts to increase competition among organizations and agencies that are eligible to receive aid. As a result, more insight and accountability will be demonstrated by recipients of federal assistance.
Super Circular Help
The OMB has repeatedly said that these reforms will make the process of obtaining federal funds easier and more transparent. If you have specific questions as to how the Super Circular will affect your organization or government agency, contact Rea & Associates. Our Ohio not-for-profit team can help you make sense of these revised regulations.
Author: Brent Ardit, CPA (Dublin office)