Kansas Tax Law Changes

Late night hours from the Kansas legislature has left us with new tax law in the state.  Senate Bill 30 was passed on June 5, 2017 and was vetoed by Governor Brownback the morning of June 6, 2017. The Legislature overrode the Governor’s veto on the evening of June 6th with a vote of 27-13 in the Senate and 88-31 in the House. Several provisions are effective January 1, 2017. A summary of the bill is below:

Non-Wage Business Income

· 100% repeal of the non-wage business income tax exemption, effective January 1, 2017

· Reinstatement of the federal loss carryover

Individual Income Tax Rates for 2017

· The current two-bracket system will be replaced with a three-bracket system of 2.9%, 4.9% and 5.2% beginning tax year 2017

Individual Income Tax Rates for 2018

· Low income exclusion threshold is reduced to $5,000 for married filers and $2,500 for single filers

·  Three-bracket income tax system continues with rates increasing to 3.1%, 5.25% and 5.7%

Itemized Deductions and Credits and Other Provisions

· 50% of federally deductible medical expenses, mortgage interest and property taxes paid in 2018; increased to 75% in 2019 and 100% in 2020 and thereafter.

· Dependent care tax credit will be set at 12.5%of allowable federal amount in 2018, 18.75% in 2019 and 25% in 2020

· Subtraction modification provision relating to net gains from certain livestock and Christmas tree sales is repealed in 2017

Check back later for in depth information.

Smart Plans. Big Wins. Lunch and Learn Training Sessions

• WEDNESDAY, MARCH 8, 2017
• 11:45AM - 1:00PM
• 3626 SW Wanamaker Road, Topeka, KS 66614

FACT: Lunch tastes better if you're getting smarter while eating. Ok, maybe not, but it would be a good use of your time to lunch and learn about Financial Mastery for Business Decision Making Wednesday March 8. Free food. Free knowledge. What's not to like? Reserve your spot now.

 http://www.brownpapertickets.com/event/2844216

We also have sessions on June 7 and September 6, so mark your calendars now.

Reversal of Overtime Rules

After organizations have been gearing up for months to implement the new overtime rules by December 1st, a federal judge in Texas has put a nationwide block on the regulation.   Last week, U.S. District Judge Amos L. Mazzant, III issued a preliminary injunction stopping the new overtime salary limit less than two weeks before its intended enactment.  As this law was set to affect both governmental and private sector employees Kansas joined 20 other states in filing a lawsuit against the US Department of Labor in September.  The states’ suit is based on the legislation committing “an ever-increasing amount of State funds to [pay] State employees salaries or overtime … [which could] unilaterally deplete State resources,” per the complaint. 

Small businesses have rallied behind the National Retail Federation and National Federation of Independent Business, which have also filed suit against the increased salary threshold and, potentially, salary and overtime expense. 

Given that President-Elect Donald Trump has called the legislation “over-regulation,” it is possible that the salary thresholds for overtime pay that were set to go into effect on December 1st, may never see the light of day, at least not in their current form. 

The injunction leaves many employers in limbo, as many employers had already made preparations to implement the overtime rules by the quickly approaching original deadline.  Now, with the blocked regulations, employers have some decisions to make.  If an employer has already reclassified employees and increased salaries to meet the expected change, the employer may prefer to keep those plans in place.  However, if an employer has not yet to reclassified employees, the employer can postpone that decision while closely watching the developments as we move towards a new US Congress and president for 2017. 

Check our blog for updates as they become available.

IRS announces 2017 pension plan limits

The IRS has announced the 2017 pension plan limits, including the following:

·       401(k), 403(b) and most 457 plans Deferral Limit - $18,000—This remains unchanged from the 2016 limits.

·       Annual Additions Limit - $54,000—This is a $1,000 increase from the 2016 threshold.

·       Maximum Compensation Limit - $270,000—This is a $5,000 increase from the 2016 limit.

·       Catch-Up Contribution Limit - $6,000—This also remains unchanged from 2016.

·       Highly Compensated Employee - $120,000—This also remains unchanged from 2016.

·       The annual benefit under a defined benefit plan under Section 415(b)(1)(A) - $215,000.—This is an increase of $5,000 from the 2016 limit.

·       ESOP 5-Year Distribution Threshold - $1,080,000—This is a $10,000 increase from the 2016 limit.

·       ESOP Additional Year Threshold - $215,000—This is a $5,000 increase from the 2016 limit.

·       The dollar limitation under § 416(i)(1)(A)(i) concerning the definition of “key employee” in a top-heavy plan is increased from $170,000 to $175,000.

Here is the link to the full announcement which includes additional details:

https://www.irs.gov/pub/irs-drop/n-16-62.pdf

If you have any questions about the information above, or have anything other questions related to your employee benefit plan audit, send us an email at info@btandcocpa.com or give Stacey Hammond or Dusty Wagoner a call at (785) 234-3427.

What is an Outsourced CFO?

Let’s start with the typical responsibilities of the Chief Financial Officer (CFO) - the CFO of a business is the right hand man (or woman) to the business owner, managing the finances and financial systems of the company and providing financial data to help make strategic long-term and day-to-day decisions.

Some business owners turn to CFOs to establish proper bookkeeping systems, billing and collecting processes and bill paying processes. Now, the CFO has a different role than a bookkeeper or accountant who mainly keeps track of the company’s books. While this is a MUST for any business, it is not the CFO’s job. The CFO uses that historical information from the accountant to plan for future cash needs, analyze current business financial performance so decisions and improvements can be made, and to help the business owner proactively manage the business.

Sounds great, huh? It really is! The CFO can make a huge impact on profitability and cash flow of a business. However, a lot of small businesses cannot justify making the leap and hiring a full-time CFO for their business. We’re numbers people. We get it. Typical CFO compensation ranges from $90,000 - $140,000 (not including benefits, taxes, etc.).

That’s why we have officially launched our outsourced CFO program – it’s a CFO at the right time, when you aren’t ready for full-time. Many businesses don’t have the need for a full-time CFO, but can benefit tremendously from having a financial executive on the team. If this sounds like you, give us a call (785-234-3427)! Not sure if it’s for you? Take the CFO quiz at http://www.btandcocpa.com/new-index and see how you score.