Dec 14, 2022
Starting with the 2021 tax year, the state of Ohio began offering dollar-for-dollar tax credits to individuals who donate to an Ohio-certified scholarship granting organization, or SGO. Defined by the state, SGOs are organizations exempt from federal taxation under section 501(c)(3) of the Internal Revenue Code, that prioritize awarding academic scholarships for low-income students to attend primary and secondary schools (K-12), and that receive certification from the Office of the Ohio Attorney General.
Individuals that donate to an SGO can expect to receive a tax credit equal to 100 percent of their contribution (up to $750,) while married couples could receive up to a $1,500 credit. In addition to claiming the state tax credit, eligible charitable contributions can also be claimed on federal income tax returns if the taxpayer opts to itemize their deductions.
Currently, there are 25 certified SGOs in the state of Ohio, all of which are listed on the Ohio Attorney General’s website.
“This is a very easy credit for Ohio taxpayers to take advantage of,” says William Vaughan Company Tax Partner, Sandi Towns. “Those who have donated to Ohio-certified SGOs in 2022 need simply include their proof of donation letter(s) with other tax documents given to their accountants.”
Says Towns, “William Vaughan Company’s tax team will continue to monitor this and other tax credit updates, however I urge anyone wishing to take advantage of these credits to contact their accountant in order to determine which credits make the most sense for their specific tax and financial situation.”
Sandi Towns, CPA/PFS, CFP®
Categories: Tax Planning
May 24, 2022
Properly qualifying assets for bonus depreciation can have a significant impact on a business’s bottom line. If an asset qualifies as long-term business property under tax rules, bonus depreciation may allow a business owner to deduct the entire cost of that asset in the year of acquisition.
This will be the last year for 100% bonus depreciation as enacted by Tax Cuts and Jobs Act (TCJA). Starting in 2023, bonus depreciation is scheduled to drop to 80% and will continue to drop by 20% each year thereafter until finally there will be no bonus depreciation starting in 2027.
Prior to the enacting of bonus depreciation, the premier tool for businesses to expense asset purchases was Section 179. Section 179 is still scheduled to be fully available and the current amount of Section 179 deduction allowed is $1,080,000 and the phase-out of the deduction starts once you place eligible assets into service of $2,700,000 and no Section 179 deduction is allowed after $3,780,000 of assets placed in service for that year. Unlike bonus depreciation, Section 179 deductions are only allowed to the extent of taxable income.
Although tax incentives like Section 179 and bonus depreciation can be beneficial, these provisions should only be used in situations that make long-term financial sense for your operation. It is important to always consider your tax circumstances and cash-flow requirements when using these tools. Connect with your William Vaughan Company advisor with additional questions.
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Mar 15, 2022
What is Grow MI Business?
Grow MI Business is a grant program launched by the state of Michigan to deliver roughly $409 million of support to eligible businesses across the state impacted by COVID. The program, signed into law at the end of last year, allows companies who were open for business before October 1, 2019, to get back a percentage of their loss in total state sales through a grant of up to $5 million.
Qualifying businesses must meet the following criteria, as noted on the program website:
- Businesses with a decline in total Michigan sales between the calendar year 2019 and 2020 equal to or greater than 5 percent.
- Businesses that are not tax-exempt
- Businesses not classified as a government entity
- Must fall under one of the following qualifying business type categories:
- Entertainment Venue, including auditoriums, arenas, banquet halls, cinemas, concert halls, conference centers, performance venues, sporting venues, stadiums, and theaters;
- Recreational Facility or Place of Amusement, including amusement parks, arcades, bingo halls, bowling alleys, casinos, nightclubs, skating rinks, water parks, and trampoline parks;
- Cosmetology or Barber Services;
- Exercise Facility or Gym;
- Food Service Establishment;
- Nursery Dealer or Grower;
- Athletic Trainer;
- Body Art Facility; or
- Hotel or Bed & Breakfast
How do I apply?
Online applications are available now through March 31, 2022 (11:59 p.m. EST). You can find additional information along with the application on the Apply for Business Resources (ABR) website, here.
Applicants will be required to submit documentation to verify financial hardship including:
- Financial Documentation and Information to verify their decline in Michigan total sales from the calendar year 2019 to the calendar year 2020 for businesses in operation on October 1, 2019.
- Financial Documentation and Information to verify their fixed costs for the calendar year 2020 for businesses that were not in operation on October 1, 2019, but started before June 1, 2020.
- Beneficiary Agreement with terms and conditions that have been electronically signed.
Please note, unlike other COVID-based funding programs, Grow MI Business is NOT a first-come, first-serve program. Instead, it may be prorated depending on the number of eligible businesses that apply.
For more information on eligibility, requirements, and award methodology, please visit Michigan.gov/abr.
Your William Vaughan Company advisor can guide you through the process and help you provide the necessary information to qualify.
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Feb 08, 2022
The U.S. Department of Agriculture (USDA) Secretary, Tom Vilsack recently announced that the USDA is deploying $100 million under the new Food Supply Chain Guaranteed Loan Program to make nearly $1 billion available in loan guarantees. The objectives are to support new investments in infrastructure for food aggregation, processing, manufacturing, storage, transportation, wholesaling, and distribution, and to also increase capacity and create a more resilient, diverse, and secure U.S. food supply chain.
What is the Food Supply Chain Guaranteed Loan Program?
The Food Supply Chain Guaranteed Loan Program is a part of the USDA’s Build Back Better initiative to strengthen critical supply chains and our food system. This program guarantees loans of up to $40 million for qualified lenders to finance food system projects, specifically for the start-up or expansion of activities in the middle of the food supply chain.
Eligible borrowers must be directly engaged in the middle of the food supply chain, specifically the aggregation, processing, manufacturing, storing, transporting, wholesaling, or distribution of food. Examples of the types of entities that may qualify for the program include meat processors and food hubs. Lenders may provide the loans to eligible cooperatives, corporations, for-profits, nonprofits, Tribal communities, public bodies, and people in rural and urban areas.
How can funds be used?
Funds are available on a first-come, first-serve basis and may be used to:
- start-up or expand food supply chain activities such as aggregating, processing, manufacturing, storing, transporting, wholesaling, or distributing food.
- address supply chain bottlenecks.
- increase capacity and help create a more resilient, diverse, and secure U.S. food supply chain.
How do I apply?
The USDA is accepting electronic applications from lenders through the Food Supply Chain Online Application System until funds are expended. Paper applications will not be accepted.
To access the online application system, lenders must submit a request to firstname.lastname@example.org.
USDA Rural Development encourages applications for projects that advance the recovery from the COVID-19 pandemic, promote equitable access to USDA programs and services, and reduce the impacts of climate change on rural communities. For more information, visit www.rd.usda.gov/priority-points.
Nov 01, 2021
Charitable Gift Planning Opportunities
In the third installment to our Timely Estate Planning Strategies Series, we outline how traditional income and estate planning may incorporate an individual’s desire to fulfill philanthropic goals. Giving can be done both while living (receiving current income tax deductions) and through one’s will at the time of death (garnering estate tax deductions). However, given the current ‘perfect storm’ we outlined in the first blog of the series, there is no better time to address your giving strategies.
The estate tax exclusion is currently $ 11.7 million per individual which means persons with an estate less than this will NOT benefit from charitable bequests in their wills. The emphasis for these individuals should be obtaining current income tax deductions while fulfilling their charitable intent. Individuals with taxable estates greater than $ 11.7 million can receive a double tax benefit by making lifetime charitable gifts. The donation is deductible for income tax purposes when the gift is made; the property along with any future appreciation is removed from the taxable estate.
Several opportunities to benefit from current charitable gifts are available. It is important to note, total itemized deductions including charitable deductions must exceed the standard deduction to receive a current income tax benefit. Some of your options include:
- Bunching contributions into one year to make sure you exceed the standard deduction.
- Contributing to Donor-Advised Funds (DAFs). A large contribution to the fund in year one provides the income tax deduction. After which, amounts can be paid from the fund to charities over a designated number of future years.
- Donating to Charitable Remainder Trusts. The remainder interest in a given property is donated to charity, obtaining a current income tax deduction, and retaining an annuity (income) interest in the property during the donor’s lifetime. Or the reverse of this,
- Giving to Charitable Lead Trusts. This provides a charity an annual distribution while the remainder interest passes to a Trust beneficiary in the future.
- Making Qualified Charitable Distributions (QCDs). Taxpayers over the age of 70 1/2 contribute directly from their IRA to a specified charity. The distribution is not taxable and no charitable deduction is taken. Structured properly, this can convert required minimum distributions into nontaxable withdrawals from the retirement account.
Your WVC advisor would love to meet with you and your estate planning team to see how charitable transactions could help you meet your philanthropic goals in a tax-efficient manner.
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