Tag Archives: taxes

Charitable Giving

September 21, 2018 by

The new tax law’s impact on charitable giving remains to be seen, but Omaha nonprofits expect the holidays will reveal whether the changes will discourage philanthropists from stepping up during the most popular time of the year to donate. 

“Until we see the numbers, we won’t know for sure,” says Matt Darling, vice president of donor services for the Omaha Community Foundation, which connects donors with causes they want to support. “Nothing can be proven yet.” 

The new law took effect Jan. 1, with the most significant change affecting the standard tax deduction, which is a fixed amount that benefits everyone who pays federal taxes. The 2018 single filer’s standard deduction is $12,000—nearly double the previous deduction of $6,350. For taxpayers who are married and filing jointly, the 2018 standard deduction is $24,000—up from $12,700.

Darling says most people donate as the holidays approach in October, November, and December, with the largest gifts going to charities between Thanksgiving and New Year’s Eve. Some people donate because they view the holidays as an emotional time of year and want to help those less fortunate; others see the season as a natural deadline or incentive for tax planning purposes before Jan. 1. 

But the fear among nonprofit organizations all over the country—organizations reliant on charitable contributions to fund their causes, pay their employees, and have a positive impact on their communities—is that under the new law, taxpayers who don’t itemize their tax returns will stop donating as much money as they had in the past.  

There are options for filers who want to give and receive a positive tax benefit, Darling says, if they use a strategy called “bunching.” 

Under bunching, taxpayers would give the same amount they would over a two-year period in only one year. Bunching in one year allows them to itemize dedications where they otherwise could not. 

“I’m hearing a lot of conversations about it, just tweaking the individual amounts,” Darling says. 

The Omaha Community Foundation has helped facilitate donor contributions of more than $906 million since it was created in 1982. Recipients have included more than 3,000 charitable organizations in Omaha and southwest Iowa, including nonprofits, initiatives, and funds. 

The foundation is made up of more than 1,200 donors. The city is nationally ranked fourth in per capita giving, according to its website. 

Despite the worries over the new tax law, Darling is confident that Omahans will donate as they always have. That’s how people are here, he says. 

“Nationally, I think there will be an effect,” Darling says. “But not every community is like ours. I have no reason to believe that Omaha will see a contraction of charitable giving.” 

He continues: “It’s our hope and the charitable community’s hope that we are going to continue down this track. We are a giving town.” 


For more information on the new tax law, visit irs.gov.

This article was printed in the September/October 2018 edition of Omaha Magazine. To receive the magazine, click here to subscribe.

Taxes Will Not Be The Death Of You

March 23, 2018 by
Photography by Bill Sitzmann

Accounting firm Lacey & Associates has been around plenty long. Not nearly as long, though, as the document that hangs on its office reception wall—a 1913 Federal Form 1040 Income Tax Return.

That’s the first return issued following passage of the 16th Amendment to the U.S. Constitution, which allowed Congress to levy an income tax without apportioning it among the states or basing it on the U.S. Census.

The return is a mere two pages long. Figuring taxable income required completion of seven lines. Seven more lines were needed to figure all deductions.

“There wasn’t much to it,” Doug Lacey says with a chuckle.

Not exactly the case more than a century later. Over the years, tax rates have risen and tax forms have grown more numerous and complicated. To the delight of many (and chagrin of many others), Congress and President Donald Trump addressed that last December with passage of the Tax Cuts and Jobs Act, one of the most far-reaching tax reform bills ever.

Doug, president of Lacey & Associates and an accountant since the 1970s, has never seen anything like it.

“It’s about as large of a change as I can remember,” he says. “There’s a lot to it, both looking at it from individual tax returns and business tax returns. Every year there would be some small changes…but nothing as big in scope as what we have starting in 2018.”

While the changes seem likely to make filing tax returns easier for the majority of individuals, they also might call for more guidance for businesses. In fact, it might cause some companies to change their very filing status.

“It gives us the opportunity to do a lot of tax planning and meet with the clients more than we probably would have,” Doug says. “To talk to them about how these changes affect them and whether to do anything different.”

With these many changes, some may worry about being audited, but accountant Scott Lacey says business owners, especially small business owners, can relax.

“There could be even fewer audits because they have simplified the tax code,” Scott says. “And typically the IRS doesn’t audit small businesses.”

Lacey’s firm has roots to the 1940s when his father, George, began providing bookkeeping and tax services part time. Doug joined him in 1977. In 1991 he began Lacey & Associates. His son, Scott, joined the firm in 2005 and is happy to be part of the family-run company.

“I realized I’m going to get more pride out of providing this service than I will staying at a large corporation,” says Scott, who previously worked in finance at First Data Corp. “The thing that I like the most about the shift is, in a smaller company, you have to have your hands in all the pots, you have to deal with the computer company, you have to pay the bills, you have to make the coffee, you have to do everything. I feel like I’m making more of an impact, but you also don’t have typical 9-5 hours, so you’re working nights and weekends quite a bit.”

Located in Ralston, the company will file 2017 returns for about 1,200 individuals and 150 businesses.

“I still get to work with some of George’s clients, or their children,” Scott says. “It’s kind of an honor.”

The Laceys have waded through multiple tax changes. They say the most important thing to know about the 2018 tax changes is that not everything is known.

The Laceys have done all they can to understand the changes, reviewing the bill, listening to online podcasts from tax experts, and reading summaries published in various industry newsletters and periodicals.

“There are certain things that even people running the webinars don’t understand or say we have to wait and see some more examples of how this works,” Doug says. “We’ll have to look at it and see the ramifications of all the different changes.”

Scott says the company will continue to keep on top of the changes.

“Sometimes the [government] adjusts the new laws throughout the year. I fully expect to see some adjustments throughout this summer and fall.”

That said, Doug expects several of the changes to have significant impact. For businesses, he points first to drops in the tax rate.

For C corporations, which pay income tax, rates drop from a high of 35 percent to a flat rate of 21 percent. “That’s why you’re seeing the stock market doing so well and seeing some corporations bring some of their different locations out of Europe, Africa, and South America back to the United States,” Doug says. “They figured out what it’s going to save them, and they’re trying to bring it back to the United States.”

For S corporations, which pass corporate income, losses, deductions, and credits through to their shareholders, the tax rate drops to a flat 20 percent.

The changes, Doug says, might lead some of his clients to switch from a C-corp. to an S-corp. “Or vice versa,” he adds.

Also of significance, Doug says, is a change to equipment write offs. Previously, that came to 50 percent of what the equipment cost. That’s been changed to 100 percent of the cost.

For individuals, Doug cites several changes as most important:

A drop in all tax brackets and new withholding tables.

A raise in the standard deduction for married couples filing a joint return from $12,700 to $24,000. That change alone, Doug says, is likely to lead most people to forgo itemizing deductions as in most cases they won’t exceed $24,000. “The IRS anticipates that people using the itemized deductions will go from 30 to 10 percent.”

The $4,150 personal exemption is being eliminated.

An increase in the child tax credit from $1,000 to $2,000 per child. The amount of the credit that is refundable increases to $1,400.

For now, the Laceys and their team are focused on handling the rush of 2017 returns. Lacey & Associates will work round the clock to make sure clients receive the best service possible.

But though definite answers won’t come until later this year, he knows the questions will come now.

“The clients are going to come in and say, ‘How does this new tax law affect my income tax?’” Doug says. “We’re going to tell them a few things, but there’s quite a few complex issues here, especially in the business area, that we can’t really say right off the top of our head how it’s going to affect them.”

From left: Scott and Doug Lacey

This article was printed in the April/May 2018 edition of B2B.

The Affordable Care Act

August 26, 2013 by
Photography by Bill Sitzmann

The Patient Protection and Affordable Care Act (PPACA), better known as the Affordable Care Act (ACA), is a federal statute signed into law in 2010. The objective of the Act is to increase affordability and rate of coverage for health insurance and reduce the overall costs of health care, which will be executed through mandates, subsidies, tax credits, and other means. The ACA is divided into 10 titles with some provisions that became effective immediately, while others are phasing in over a 10-year period.

But what does this mean for most seniors?

“If you don’t have insurance between age 60 and 65, that’s a concern.” – Andrea Skolkin, OneWorld Community Health Centers, Inc.

Individuals over 65 will likely find that not much will change as far as Medicare is concerned, says Andrea Skolkin, chief executive officer for OneWorld Community Health Centers, Inc. More preventive care is covered and prescription drug coverage will improve, she says, but most facets of Medicare will carry on as before.

“People who have Medicare, other than the little bit of expansion in the ‘donut hole’ [Medicare Part D coverage gap between the initial coverage limit and the catastrophic-coverage threshold for prescription drugs], should be secure in their coverage,” she explains. “The new marketplace isn’t for people who have Medicare.”

Sixty-plus individuals who will definitely be affected by ACA are those seniors who haven’t reached the Medicare eligibility age of 65 and are without medical insurance. In January 2014, uninsured individuals will be required to buy health insurance, available through an exchange, or pay a penalty tax. Some people will certainly struggle to finance the premiums, but currently, seniors who don’t yet qualify for Medicare and can’t get covered through an employer are likely to take their chances and go without health insurance altogether, Skolkin says.

EJ Militti, financial advisor with The Militti Group at Morgan Stanley Wealth Management

EJ Militti, financial advisor with The Militti Group at Morgan Stanley Wealth Management

“If you don’t have insurance between age 60 and 65, that’s a concern,” she says. “We see a lot of it—people 55 and up—who are being ‘right-sized,’ if you will, out of their jobs and are left without anything until they are eligible for Medicare. Especially at our new clinic in West Omaha, we see a lot of uninsured adults.”

From a financial standpoint, it’s fair to say that ACA will not spell good news for everyone’s pocketbook, says EJ Militti, a financial advisor with The Militti Group at Morgan Stanley Wealth Management.

“[For] the wealthy and those who have properly saved for health care and other retirement costs, there is less to like and greater confusion about government-mandated health care. Moreover, those considered wealthy will be helping foot the bill of this epic legislation,” he says, explaining that a Medicare tax increase and additional taxes on taxable investment income have been instated, and other proposals are pending. “In my opinion, there is little doubt higher-income earners are going to be paying more in taxes. Higher-income earners need to be aware of future tax proposals on the table.”

On the other hand, Militti points out, some Americans will clearly benefit financially from the legislation.

“[For] the wealthy and those who have properly saved for health care and other retirement costs, there is less to like and greater confusion about government-mandated health care.” – EJ Militti, The Militti Group at Morgan Stanley Wealth Management

“The poor, the lower middle class, the long-term unemployed, and those with pre-existing conditions will benefit the most, and that’s by design,” Militti says. “The entire premise for government-mandated health care is to provide taxpayer-financed subsidies for those who, otherwise, cannot provide for themselves.”

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EJ Militti is a Financial Advisor with The Militti Group at Morgan Stanley Wealth Management. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, Member SIPC, or its affiliates. 

Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates, and Morgan Stanley Financial Advisors or Private Wealth Advisors do not provide tax or legal advice. This material was not intended or written to be used, and it cannot be used, for the purpose of avoiding tax penalties that may be imposed on the taxpayer. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters.