Was a college student in your family last year? Or were you a student yourself? You may be eligible for some valuable tax breaks on your 2016 return. To max out your higher education breaks, you need to see which ones you’re eligible for and then claim the one(s) that will provide the greatest benefit. In most cases you can take only one break per student, and, for some breaks, only one per tax return.
Everyone from major donors to grantmakers, charity watchdog groups to the government, will read your not-for-profit’s annual report and use it to make important decisions affecting your organization. So you need to make sure it’s professional, substantive and accurate — and interesting enough to grab and keep readers’ attention.
Cover the basics well
Most nonprofit annual reports consist of several standard sections, including:
Chairman of the Board’s letter.
In December, Congress passed the 21st Century Cures Act. The long and complex bill covers a broad range of health care topics, but of particular interest to some businesses should be the Health Reimbursement Arrangement (HRA) provision. Specifically, qualified small employers can now use HRAs to reimburse employees who purchase individual insurance coverage, rather than providing employees with costly group health plans.
The need for HRA relief
Employers can use HRAs to reimburse their workers’ medical expenses,
Investment interest — interest on debt used to buy assets held for investment, such as margin debt used to buy securities — generally is deductible for both regular tax and alternative minimum tax purposes. But special rules apply that can make this itemized deduction less beneficial than you might think.
Limits on the deduction
First, you can’t deduct interest you incurred to produce tax-exempt income. For example,
Your not-for-profit’s board members may be able to offer access to better deals or services than your organization could get on its own. However, there’s a fine line between a board member helping your nonprofit get fair pricing and the member receiving perceived or actual personal benefits. The latter can threaten your exempt status.
Best practices
A fictional example can help illustrate what nonprofits should do in such circumstances:
A charity needs a printer to produce programs for its annual gala.
Bonus depreciation allows businesses to recover the costs of depreciable property more quickly by claiming additional first-year depreciation for qualified assets. The PATH Act, signed into law a little over a year ago, extended 50% bonus depreciation through 2017.
Claiming this break is generally beneficial, though in some cases a business might save more tax in the long run if they forgo it. However, 2016 may be an especially good year to take bonus depreciation.
In addition to income tax, you must pay Social Security and Medicare taxes on earned income, such as salary and self-employment income. The 12.4% Social Security tax applies only up to the Social Security wage base of $118,500 for 2016. All earned income is subject to the 2.9% Medicare tax.
The taxes are split equally between the employee and the employer. But if you’re self-employed, you pay both the employee and employer portions of these taxes on your self-employment income.
An informal, ad hoc approach to fundraising can waste time, resources and opportunities. To ensure that doesn’t happen, your not-for-profit needs to form a committee to create and execute a strategic fundraising plan.
Committee work
Your fundraising committee should include board members, your executive director, key staff members and possibly other stakeholders such as major donors. Its work begins with identifying past funding sources and approaches, and the advantages and disadvantages of each.
Many businesses find themselves short-staffed from Thanksgiving through December 31 as employees take time off to spend with family and friends. But if you limit how many vacation days employees can roll over to the new year, you might find your workplace a ghost town as workers scramble to use, rather than lose, their time off. A paid time off (PTO) contribution arrangement may be the solution.
How it works
A PTO contribution program allows employees with unused vacation hours to elect to convert them to retirement plan contributions.
For many people, the cost of medical care keeps going up. So if possible, you should find ways to claim tax breaks related to health care. Unfortunately, it can be difficult because there’s a threshold for deducting itemized medical expenses that can be tough to meet.
To make matters worse, the threshold for senior taxpayers is going up beginning January 1, 2017.
General rules
Before 2013,
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