Spending the PPP Money on You and Your Employees
August 19, 2020
If you report your business income and expenses on Schedule C of your Form 1040, your Payroll Protection Program (PPP) loan forgiveness is straightforward, as you see in the four answers below.
1. Paying Myself
Question. I know that I can achieve full forgiveness based solely on my 2019 Schedule C income in 10.8 weeks under the 24-week program. Do I have to pay myself every week for 10.8 weeks?
Answer. No. Let’s say your PPP loan is for $20,000. You could, for example, take $20,000 out of your business account in one lump sum and put that in your personal savings anytime during the 10.8-week period and then apply for forgiveness in week 11.
Because both your loan and forgiveness are based on your 2019 Schedule C net profit (yes, last year), you simply need to use the loan money for personal purposes. This is how you pay yourself and obtain loan forgiveness the easy way.
Sure, you need to use only 60 percent of the proceeds for yourself and could use 40 percent for interest, rent, and utilities. But think about it:
• Pay yourself only: simple paperwork.
• Pay interest, rent, and utilities: more rules and paperwork.
Keep it simple. Don’t make yourself suffer.
2. Waiting to Spend
Question. Can I wait a number of weeks before I spend my loan proceeds?
Let’s say I receive the PPP proceeds on August 1, 2020. Can I use the 24-week period and start on August 17, for 11 weeks? Would that be okay? And would it be eligible for forgiveness?
Answer. Yes, no problem. But let’s be clear:
• For PPP loans made on June 5 or later, the 24-week covered period is the rule (there’s no “can” here—no eight-week possibility).
• There’s no requirement that a Schedule C taxpayer spread out the payments.
• There’s no payroll or other impediment here.
3. Spending in Chunks
I am a Schedule C taxpayer with no employees. My PPP loan amount was deposited into my business checking account on May 19, 2020. I am not electing the eight-week covered period. Instead, I am choosing the 24-week covered period, which ends on November 2, 2020.
I have two questions.
Question 1. Can I write one check for every four weeks of payroll and deposit it in my personal checking account?
Answer 1. Yes—but this is not a payroll check. As a Schedule C taxpayer with no employees, you have no payroll. Your PPP loan was based on your 2019 net profit. And your forgiveness will be based on the same amount. You don’t need to spread out your payments.
Question 2. Does this check have to be cashed within that four-week period, or if it is written within that period, is that sufficient to apply for forgiveness?
Answer 2. In general, your check is a payment on the date it is written. Because you are dealing with yourself, you should ensure that the check is cashed soon after it is written.
Also, we don’t see any wisdom (in fact, just the opposite) in writing the check within the 24 weeks and then cashing it outside the 24 weeks.
4. Got the PPP Money but Had a Loss in 2019
Question. I am a Schedule C filer, ran at a loss in 2019, but withdrew $120,000 from the business as the business increased its debt position.
I used my draw amount to obtain a $120,000 PPP loan before the guidance was issued on how sole proprietors should calculate their pay. If the business now has two employees, can both of those employees be used for the forgiveness application?
Answer. Yes, you can use the two employees on the forgiveness application, and you can use 24 weeks of pay. In addition to payroll, 40 percent of the forgiveness can come from interest, rent, and utilities.
Example. Say the two-employee payroll for the 24 weeks totals $60,000 and the interest, rent, and utilities total $30,000. You would achieve $90,000 of forgiveness.
Q&A: PPP Forgiveness Answers for S Corporation Owner-Employees
Tax law definitions do not apply to much of the PPP, making it new ground for owners of S corporations. Here are answers to four questions of concern to many S corporation owners.
1. Spouse Owns S Corporation
Question. My wife owns 100 percent of the S corporation. She has a full-time job and does no work for the S corporation. I am the sole worker in the S corporation. Am I treated as:
• a “non-owner employee” of the S corporation; or
• an “owner-employee” subject to the limits?
Answer. The PPP guidance does not address the situation you describe. From what we know, you are a non-owner employee, which means you are not stuck with the owner-employee limits.
In tax law, you would have to consider “attribution rules” that would make you own what your wife owns because of your marital relationship. (Yes, in tax law you both would own 100 percent.) But the PPP guidance to date contains no such rules.
According to the latest from the Small Business Administration (SBA), you may rely on the laws, rules, and guidance available at the time of your PPP loan application. As we write, the latest guidance is from over a month ago, on June 25, 2020.
2. S Corporation Owner-Employee with No W-2
Question. I submitted my PPP loan application before the guidance disallowing independent contractor payments was published. And at the time of submission, I had not yet started paying myself a salary.
Now I have the PPP money from the bank but cannot get it forgiven through contractor payments. If I pay myself on a W-2, I lack the look-back period of 2019 payroll. Am I out of luck? Should I go on payroll and hope for the best?
Answer. Under the rules, you are out of luck. Your loan forgiveness is based on the lower of your 2019 W-2 (zero) or your 2020 W-2.
3. S Corporation Loan Based
on K-1
Question. I operate my business as an S corporation with two W-2 employees other than me (I don’t receive a W-2). I applied for the PPP loan and obtained it based on my K-1.
A few weeks later the lender told me that the money I received was not available to be forgiven. This doesn’t seem fair. My profit is my income. Is there any workaround for this?
Answer. No—no workaround. But in your case, likely no PPP loan forgiveness problem either.
But first, let’s think about taxes. You operate as an S corporation, and you take no salary. (That’s incorrect and likely a tax problem if the IRS audits your tax return.)
Now, let’s get to the PPP. Your lender granted you the PPP loan based on the K-1 and ignored your employees. That shows how confusing the PPP has been. But let’s ignore the right and wrong of that and get to the heart of the issue. Can you obtain forgiveness?
Yes, your S corporation’s forgiveness begins with what you pay your W-2 employees during the 24-week covered period, including what you pay in health insurance and retirement on their behalf. In addition, you may include some or all of your payments for business interest, rent, and utilities during the 24 weeks beginning with receipt of the loan.
Example. Let’s say you received a $100,000 loan. If your payroll during the 24 weeks is $63,000 and the rent and utilities total $37,000, you would qualify for 100 percent forgiveness. If you achieve this in 20 weeks, you could apply for forgiveness then.
Observation. The fact that the lender based your loan on your profits is simply a mistake by the lender. It does not affect forgiveness, which is based on your using the money for the intended PPP purposes such as payroll.
4. S Corporation with Home Office
Question. You recommend that the S corporation owner use an expense report to submit home-office expenses to the business for reimbursement and then classify the reimbursement in the tax return as an office expense.
How would we classify this as mortgage interest and utilities under the PPP loan forgiveness guidelines? We have the same question for partnerships where an item is claimed as an unreimbursed partner expense.
Answer. The reimbursed expense won’t work for the PPP, but here’s the solution: choose the 24-week program, and you will achieve full forgiveness with only the payroll in as little as 10.8 weeks.
Insights into the PPP Loan and Its Forgiveness
We receive many questions about the PPP. Here are two of them with our answers.
1. Good Faith at the Time
Question. What are your thoughts on the repercussions for business owners who acted in good faith based on the information available at the time and are now left to do things that may be more questionable to earn PPP loan forgiveness?
Answer. First, with good faith, there’s no fraud issue as there is no fraud intent. Second, lenders and individuals had to scramble for a good two months or more before guidance was clarified, so many of the PPP loan application forms were murky (and some still are).
Obtaining the loan based on the guidance that existed at the time of your loan application and approval is a non-issue. Further, lenders used their own formulas during the early process (and in some cases, still use them) to determine the loan amounts.
As to taking “questionable” actions to earn forgiveness, if you follow the forgiveness applications, you are doing nothing questionable. And that’s what you should do: follow the instructions in the loan forgiveness applications.
2. EIDL, EIDL Advance, and PPP
Question. I’ve heard of the Economic Injury Disaster Loan (EIDL), EIDL advance, and the PPP. What are the differences?
Answer. We’ll deal with the big picture here. It will prove helpful.
PPP. The PPP is the cash infusion program of choice. The cash infusion part comes from a bank or other SBA lender and is based on your prior payroll (2019 in most cases). It comes into your business as a forgivable loan if you spend the money on defined payroll, interest, rent, and utilities during a period of up to 24 weeks.
Example. You receive a $50,000 PPP loan and spend it within the 24 weeks on defined payroll with no reduction in your employee head count. You qualify for 100 percent forgiveness.
EIDL. Unlike the PPP loan, which comes from a bank or other approved SBA lender, the EIDL is a loan directly from the SBA; it carries a 3.75 percent interest rate, may require collateral, and must be repaid.
EIDL advance. The EIDL advance, when available, comes into play with the EIDL application. It’s an advance on the EIDL of up to $10,000. If you reject or don’t receive an EIDL and don’t have a PPP loan, the EIDL becomes a non-taxable grant and does not have to be repaid.
If you have a forgivable PPP loan, you reduce the amount of forgiveness by the amount of your EIDL advance.
Example. You have a forgivable PPP loan of $30,000 and an EIDL advance of $7,000. The lender will forgive $23,000 of your $30,000. Let’s say you pay off the remaining $7,000. In this case, you have received a net of $30,000 ($7,000 + $30,000 - $7,000).
All About Limited Liability Companies
Limited liability companies (LLCs) are a popular choice of entity for small businesses and investment activities. LLC owners are called members.
Single-member LLCs have one owner, although spouses who jointly own an LLC in a community property state can elect treatment as a single-member LLC for federal income tax purposes. We will call LLCs with two or more members multimember LLCs.
Key point. LLCs are not corporations. But LLCs can offer similar legal protection to their members (owners).
Here are the most important things to know about LLCs.
LLCs Offer Legal Protection
Using an LLC to conduct a business or investment activity generally protects your personal assets from LLC-related liabilities—similar to the legal protection offered by a corporation.
As you know, liabilities can arise from simple things—like a delivery guy slipping on something you left on your front steps—or in seemingly endless and complicated ways if you have employees.
Key point. As a general rule, no type of entity (including an LLC) will protect your personal assets from exposure to liabilities related to your own professional malpractice or your own tortious acts.
Tortious acts are wrongful deeds other than by breach of contract—such as negligent operation of a motor vehicle resulting in property damage or injuries. The issue of liability protection offered by an LLC is a matter of state law. Seek advice from a competent business attorney for details.
Single-Member LLC Tax Basics
Single-member LLC businesses owned by individuals are treated as sole proprietorships for federal income tax purposes unless the member elects to treat the single-member LLC as a corporation.
In other words, the default federal income tax treatment for a single-member LLC business is sole proprietorship status. Under the default treatment, you simply report all the single-member LLC’s income and expenses on Schedule C of your Form 1040.
If the single-member LLC business activity generates net self-employment income, you will report that on Schedule SE of your Form 1040.
Rental. If the single-member LLC activity is a rental activity, you report the rental income and expenses on Schedule E of your Form 1040.
Farm or ranch. You report the numbers for a farming or ranching activity on Schedule F.
Simple. You don’t need to file a separate federal income tax return for the single-member LLC. And other things being equal, simple is good.
Three key points
1. The big federal income tax advantage of operating as a single-member LLC is simplicity.
2. The big non-tax advantage is liability protection, under applicable state law.
3. As mentioned, you can elect to treat a single-member LLC as a corporation for federal income tax purposes, but we don’t recommend that, for reasons we explain later.
Multimember LLC Tax Basics
Multimember LLCs are treated as partnerships for federal income tax purposes unless you elect to treat the LLC as a corporation.
In other words, the default federal income tax treatment for a multimember LLC is partnership status. Under the default treatment, you must file an annual partnership federal income tax return on Form 1065.
From the Form 1065 partnership return, the LLC issues an annual Schedule K-1 to each member to report that member’s share of the LLC’s income and expenses. The member then takes those taxable and deductible amounts into account on the member’s own return (Form 1040 for a member who is an individual).
The LLC itself does not pay federal income tax. This arrangement is called pass-through taxation, because the income and expenses from the LLC’s operations are passed through to the members, who then take them into account on their own returns. (The same pass-through taxation concept applies to entities set up as “regular” partnerships under applicable state law.)
Electing to Treat the LLC as a Corporation for Tax Purposes
You have the option of electing to treat a single-member LLC or multimember LLC as a corporation for federal income tax purposes. You do that by filing IRS Form 8832, Entity Classification Election, to change the default classification of the single-member LLC or multimember LLC to the new classification as a corporation.
If your desire is to have your LLC treated as an S corporation, it can elect S corporation status directly using IRS Form 2553, or it can elect C corporation treatment on Form 8832 and then S corporation treatment on IRS Form 2553. While there may be valid non-tax reasons for electing to treat an LLC as a corporation, we think tax reasons generally dictate against taking that step.
If you conclude that there are tax advantages to electing corporate status, why not just actually incorporate your operation in the first place? That’s simpler. Keeping your tax matters simple is generally good policy.
Electing corporate status from the LLC could have unintended tax consequences. For example, you can potentially collect federal-income-tax-free gains from selling stock in a qualified small business corporation (QSBC). But you must own shares and hold them for over five years to cash in on this super-favorable deal. Can an LLC membership (ownership) interest count as QSBC stock for this purpose? Apparently not. It’s not stock.
If you are looking for the QSBC stock break, just set up as a corporation in the first place.
Here’s another example: a special federal income tax break allows you to annually deduct up to $50,000 of losses from selling eligible small business stock, or $100,000 if you’re a married joint filer, and treat the loss as a tax-favored ordinary loss instead of a tax-disfavored capital loss.
Can an LLC membership interest count as eligible stock for this purpose? Apparently not. It’s not stock. Avoid the problem—set up as a corporation in the first place.
Celebrating Random Acts of Kindness Week with Acumen MB LLC
January marks both Financial Wellness Month and Get Organized Month—a perfect combination for setting your business up for success in the new year. At Acumen MB LLC, we understand that juggling finances, taxes, and everyday business operations can be overwhelming. That’s where QuickBooks, one of the most powerful accounting tools available, comes in. Why Financial Wellness Matters Financial wellness isn’t just about paying your bills on time; it’s about creating a sustainable system for managing cash flow, reducing debt, and planning for future growth. For businesses, financial wellness directly impacts your ability to make strategic decisions, secure loans, and stay compliant with tax regulations. Get Organized with QuickBooks QuickBooks is a game-changer for businesses looking to streamline their accounting processes. Here’s how it can help you stay organized and financially healthy: 1. Centralized Financial Data QuickBooks allows you to keep all your financial information in one place. From tracking income and expenses to managing invoices and payments, everything is easily accessible. No more sifting through piles of paper or juggling multiple spreadsheets! 2. Real-Time Insights The platform offers real-time insights into your financial health. With customizable dashboards and reports, you can monitor key metrics like cash flow, profit margins, and overdue invoices. These insights empower you to make informed decisions and identify potential financial risks before they become major issues. 3. Automation for Efficiency Automation features like recurring invoices, automatic payment reminders, and bank reconciliation save you time and reduce errors. This efficiency allows you to focus on growing your business rather than getting bogged down in administrative tasks. QuickBooks and Tax Compliance One of the biggest challenges for businesses is staying compliant with ever-changing tax regulations. QuickBooks can: Automatically categorize expenses to ensure proper deductions. Generate reports that meet IRS requirements. Help track payroll taxes and sales tax liabilities. With QuickBooks, you can reduce the risk of costly mistakes and audits. Partner with Acumen MB LLC While QuickBooks is a robust tool, it’s most effective when tailored to your specific needs. That’s where we come in. At Acumen MB LLC, our team of experts can help you: Set up QuickBooks for your business. Provide training to ensure you’re maximizing its features. Regularly review your financial data to keep you on track. Our goal is to help you achieve financial wellness and organization, setting the foundation for long-term success. Let’s Start the Year Right Ready to take control of your finances and get organized? Contact Acumen MB LLC today to learn how QuickBooks can transform your business. Together, we can make 2025 your most successful year yet!
Planning for college is an exciting yet overwhelming journey for students and their families. As tuition costs continue to rise, financial preparation is critical to making higher education more affordable and less stressful. At Acumen MB LLC, we understand the importance of financial planning and its intersection with accounting and taxes. In honor of National College Financial Prep Week, we’re sharing key insights to help you navigate this pivotal stage with confidence. 1. Leverage Tax-Advantaged Savings Accounts One of the best ways to prepare financially for college is by utilizing tax-advantaged accounts like 529 plans. Contributions to these accounts grow tax-free, and withdrawals used for qualified education expenses are also tax-free. Some states even offer tax deductions or credits for contributions. Work with your accountant to determine the best savings strategy and ensure you’re maximizing these benefits. 2. Understand Education Tax Credits The U.S. tax code provides valuable credits for families paying for college: American Opportunity Tax Credit (AOTC): Offers up to $2,500 per eligible student for the first four years of higher education. Lifetime Learning Credit (LLC): Provides up to $2,000 per tax return for post-secondary education expenses. Eligibility depends on factors such as income and enrollment status. Our team can help you determine which credits you qualify for and how to claim them. 3. Track Education Expenses for Tax Purposes Keeping detailed records of tuition payments, textbooks, and other qualifying expenses is crucial. Accurate tracking ensures you can claim all applicable tax benefits. Consider creating a dedicated folder or digital system to organize receipts and statements. 4. Explore FAFSA and Other Financial Aid Options The Free Application for Federal Student Aid (FAFSA) is essential for accessing federal grants, loans, and work-study opportunities. Many colleges also use FAFSA data to determine institutional aid. Filing early can increase your chances of receiving aid. Remember, certain tax information, such as income and assets, will be required for the application. 5. Deduct Student Loan Interest If you or your child take out student loans, you may be eligible to deduct up to $2,500 in student loan interest annually. This deduction applies even if you don’t itemize deductions. However, there are income limits, so consult with your accountant to understand how this impacts your tax situation. 6. Involve Your Student in Financial Planning Encourage your student to take an active role in financial planning. Discuss topics such as budgeting, managing part-time job income, and understanding the impact of student loans. These lessons will empower them to make informed decisions during college and beyond. 7. Work with a Trusted Accounting Partner Navigating the complexities of college financial prep can be daunting, but you don’t have to do it alone. At Acumen MB LLC, we specialize in providing personalized accounting and tax solutions to help families achieve their financial goals. From optimizing savings strategies to maximizing tax benefits, our team is here to guide you every step of the way. Ready to Start Planning? National College Financial Prep Week is the perfect time to take proactive steps toward securing your family’s educational future. Contact Acumen MB LLC today to schedule a consultation and ensure your financial plan is as robust as your student’s aspirations.
As the calendar year winds down, businesses and corporations have an invaluable opportunity to optimize their financial position through strategic year-end tax planning. At Acumen MB LLC, we understand the importance of taking proactive steps to minimize tax liabilities, maximize deductions, and set the stage for a successful year ahead. Here are key strategies and considerations to help your business close the year on a strong financial note. 1. Review Financial Statements Your financial statements provide the foundation for effective tax planning. By analyzing your profit-and-loss statement, balance sheet, and cash flow, you can identify areas for improvement and ensure all transactions are recorded accurately. · Tip : Ensure expenses are categorized correctly and revenue recognition complies with IRS standards. Accurate records reduce the risk of audits and penalties. 2. Maximize Deductions and Credits Take advantage of every tax-saving opportunity available to your business. Common deductions include: · Section 179 Expensing : Deduct the full cost of qualifying equipment or software purchased this year. · Depreciation Deductions : Review assets eligible for bonus depreciation. · Employee-Related Tax Credits : Look into the various options available such as the Work Opportunity Tax Credit (WOTC). · R&D Tax Credit : If your business invests in research and development, this credit can significantly reduce your tax burden. 3. Consider Timing Income and Expenses Deferring income or accelerating expenses can lower your taxable income for the current year: · Defer Income : Delay invoicing until January if your cash flow permits. · Accelerate Expenses : Prepay certain expenses like rent or utilities to claim the deduction this year. · Year-End Bonuses : Pay employee bonuses before December 31 to include them as deductions. 4. Optimize Retirement Contributions Contributing to employee retirement plans can lower taxable income while providing long-term benefits for your workforce. · Tip : Maximize contributions to plans like a 401(k) or SEP IRA. If you don’t already have a plan in place, consider establishing one before the year ends. 5. Perform a Tax Loss Harvest Offset gains by selling underperforming assets before year-end. This strategy, known as tax loss harvesting, can reduce taxable income. · Tip : Coordinate with your financial advisor to ensure this aligns with your long-term investment goals. 6. Evaluate Your Business Structure Your tax obligations can vary significantly based on your entity type (e.g., LLC, S Corporation, C Corporation). Year-end is an excellent time to assess whether your current structure is still the best fit for your business. · Tip : Consult with a tax advisor to determine if restructuring could provide tax savings for the upcoming year. 7. Review Your Estimated Tax Payments Underpaying estimated taxes can result in penalties. Verify that your quarterly payments align with your projected tax liability for 2024. · Tip : If you’re unsure, a tax professional can help you calculate and adjust your payments. 8. Stay Compliant with State and Local Taxes Don’t overlook state and local tax obligations, such as sales tax, use tax, or franchise tax. Ensure you’ve met all filing requirements to avoid costly penalties. 9. Schedule a Consultation with Acumen MB LLC Year-end tax planning is not one-size-fits-all. Every business has unique needs, and having a trusted advisor by your side can make all the difference. At Acumen MB LLC, our team of experienced accountants is here to help you navigate the complexities of year-end planning. From identifying tax-saving opportunities to ensuring compliance with new regulations, we’re committed to helping your business thrive. Contact us today to schedule your year-end consultation and start the new year with confidence.
As we approach the close of another year, it’s time to take a strategic look at your finances. Year-end tax planning can help individuals maximize deductions, minimize tax liabilities, and set themselves up for a successful financial year ahead. At Acumen MB LLC, we’re here to guide you through some essential steps to streamline your tax planning before the clock strikes midnight on December 31 st . 1. Maximize Retirement Contributions Contributing to retirement accounts is a win-win: you’re securing your financial future while potentially lowering your taxable income. · Traditional IRA and 401(k) : Contributions to these accounts may be deductible, reducing your taxable income for 2024. · Catch-Up Contributions : If you’re 50 or older, take advantage of higher contribution limits for added savings. 2. Review Charitable Giving The season of giving is also an excellent time to reduce your tax bill. · Donations : Cash donations to qualified charities are deductible if you itemize your deductions. · Non-Cash Donations : Donating appreciated assets like stocks can provide additional tax benefits. 3. Harvest Capital Gains and Losses Take a look at your investment portfolio to determine if selling some assets could benefit your tax situation. · Offset Gains with Losses : Selling losing investments can offset capital gains and up to $3,000 of other income. · Long-Term Gains : If possible, take advantage of lower tax rates on long-term capital gains. 4. Plan for Education Expenses Education-related tax benefits can make a significant difference. · 529 Plans : Contribute to a 529 plan for tax-advantaged savings on future education expenses. · Education Credits : Consider whether you’re eligible for the American Opportunity or Lifetime Learning Credit. 5. Review Your Withholding and Estimated Payments Ensure you’re on track with tax payments to avoid surprises. · Withholding Adjustments : If your income changed significantly in 2024, update your withholding through your employer. · Estimated Taxes : Self-employed or investors should check their quarterly estimated payments. 6. Take Advantage of Tax Credits Don’t overlook valuable tax credits that can reduce your tax bill dollar for dollar. · Energy-Efficient Home Improvements : If you’ve made energy-efficient upgrades, you may qualify for a credit. · Child and Dependent Care Credit : Offset childcare expenses if you qualify. 7. Bunch Deductions If you’re close to the standard deduction threshold, consider bunching deductible expenses into one year. This strategy allows you to itemize deductions one year and take the standard deduction the next. 8. Consult a Tax Professional Tax laws change frequently, and what worked last year may not be the best strategy for 2024. Consulting with a professional can ensure you’re taking full advantage of available tax-saving opportunities. Let Acumen MB LLC Help You Prepare At Acumen MB LLC, we’re dedicated to helping our clients navigate the complexities of year-end tax planning. Whether you need guidance on optimizing deductions, managing investments, or preparing for future tax changes, we’re here to help. Contact us today to schedule your year-end tax planning consultation. Let’s work together to ensure a smooth and successful tax season ahead.
At Acumen MB LLC, we believe in leveraging every tool available to maximize your financial well-being, and Health Savings Accounts (HSAs) are one of the most powerful tools in your financial toolkit. In honor of National HSA Day, let’s dive into the tax benefits and implications of using an HSA, and why it’s a smart move for your health and your wallet. What is an HSA? An HSA is a tax-advantaged savings account designed for individuals with high-deductible health plans (HDHPs). It allows you to save for medical expenses while enjoying significant tax advantages. Triple Tax Advantage of HSAs 1. Tax-Deductible Contributions Contributions to your HSA are either pre-tax (if made through an employer) or tax-deductible (if made personally). This reduces your taxable income, which can lower your overall tax liability for the year. 2. Tax-Free Growth Funds in your HSA grow tax-free. Whether your HSA balance earns interest or is invested, all growth is sheltered from taxes, allowing your savings to compound more effectively over time. 3. Tax-Free Withdrawals for Qualified Expenses Withdrawals used for qualified medical expenses are tax-free. These can include a wide range of expenses, from doctor visits and prescriptions to dental and vision care. Contribution Limits for 2025 For 2025, the contribution limits are: - Individual coverage : $4,350 - Family coverage : $8,750 - Catch-up contributions (age 55+): Additional $1,000 These increased limits provide even more opportunity to save while reducing taxable income. HSAs: More Than Just Medical Savings One unique aspect of HSAs is their flexibility: - Retirement Savings : After age 65, you can withdraw funds for any purpose without penalty (though non-medical withdrawals are taxed as income). - Long-Term Care and Medicare Premiums : HSA funds can be used for these expenses in retirement, making it a versatile tool for long-term financial planning. Potential Tax Implications While HSAs offer numerous benefits, it’s important to consider the following: - Non-Qualified Withdrawals : If you withdraw funds for non-qualified expenses before age 65, you’ll face a 20% penalty and income taxes on the amount. - Record-Keeping : To avoid penalties, keep detailed records of your medical expenses. Maximize Your HSA Benefits with Acumen MB LLC Understanding how to effectively use an HSA can make a significant difference in your financial health. Whether you’re planning for today’s medical expenses or looking ahead to retirement, Acumen MB LLC is here to help you navigate the tax advantages and ensure you’re making the most of this powerful savings vehicle. On National HSA Day, take a moment to review your contributions, maximize your savings, and plan for a healthier, wealthier future. Contact us today to learn more about HSAs and other tax-advantaged strategies tailored to your financial goals.
At Acumen MB LLC, we know that giving back to the community is more than just a noble endeavor – it’s a cornerstone of a thriving society. As we celebrate National Volunteers Month and International Volunteer Day, we invite you to explore meaningful ways to make a difference. Whether you want to volunteer locally here in Cleveland, nationally across the U.S., or even internationally, there are countless opportunities to lend a hand and share your talents. Local Opportunities in Cleveland, OH 1. Greater Cleveland Food Bank Help fight hunger by volunteering at the Greater Cleveland Food Bank. You can assist with packing food boxes, distributing meals, or even offering administrative support. 2. Cleveland Animal Protective League For animal lovers, the Cleveland APL offers opportunities to care for shelter animals, assist with adoptions, and provide much-needed companionship. 3. Habitat for Humanity of Greater Cleveland Get hands-on by building homes and improving neighborhoods, providing safe and affordable housing for local families. National Volunteer Opportunities 1. American Red Cross From disaster relief to blood donation drives, the American Red Cross has numerous ways to get involved. Volunteers are essential in helping communities recover and thrive. 2. Big Brothers Big Sisters of America Make a lasting impact in a child’s life by becoming a mentor. This program helps children across the country achieve their potential through guidance and support. 3. Feeding America Join the fight against hunger by supporting food banks and meal programs nationwide. Volunteers can help sort donations, organize food drives, or assist with meal prep and distribution. International Volunteer Opportunities 1. Doctors Without Borders For medical professionals and support staff, this organization provides life-saving medical care in crisis zones around the world. 2. UN Volunteers Program The United Nations offers a wide array of volunteer positions that support peace, development, and humanitarian efforts globally. 3. Habitat for Humanity Global Village Combine travel with giving back by joining a Global Village trip to build homes and support sustainable development in communities worldwide. How Volunteering Benefits You Volunteering isn’t just about giving; it’s also about growing. It can improve your mental health, teach you new skills, and expand your network. Most importantly, it brings a sense of fulfillment as you make a positive impact on others. As accountants, we know the value of time and resources. This Volunteers Month, we encourage our clients and community members to invest in what truly matters – helping others. Share your experiences with us, and let’s celebrate the spirit of volunteerism together!
November is National Scholarship Month, a time to raise awareness about how scholarships hep students reach their educational goals. At Acumen MB LLC, we’re excited to spotlight Scholarship Granting Organizations (SGOs) and how your support can both empower students and provide valuable tax benefits. What Are Scholarship Granting Organizations (SGOs)? SGOs are nonprofit organizations dedicated to awarding scholarships to students, often for private or specialized school education. These scholarships can bridge financial gaps, offering students access to opportunities they may not otherwise have. As a donor, your contributions to SGOs can not only support education but also yield significant tax benefits. Tax Benefits of Donating to SGOs Supporting an SGO is more than a generous act; it’s a tax-savvy move. Here’s how your contribution can be mutually beneficial: 1. Federal Tax Deduction Donations to qualified SGOs often qualify for a federal tax deduction if you itemize your deductions, helping to lower your taxable income. 2. State Tax Credits Some states offer tax credits for SGO donations, which directly reduce the amount of state taxes you owe. The availability and limits of these credits vary by state, and we can assist you in determining what may apply to you based on your location. 3. Carry Forward Credits If your donation exceeds your state’s annual credit limit, many states allow unused credits to carry forward to future tax years, ensuring you receive the full benefit of your donation over time. To maximize these tax advantages, make sure your SGO donation is completed by December 31st of this year. Contributions made before year-end will count toward your tax return for the current year. Additional Resources and Certification In Ohio, you can find a list of certified SGOs and their requirements here . Checking this list ensures that your donation will meet state eligibility requirements for tax benefits. A Win-Win for Your Taxes and the Community Supporting SGOs is a powerful way to invest in our community’s future and help students receive the education they deserve. Through careful planning, your donation can also offer substantial tax savings, making the decision to donate a true win-win. At Acumen MB LLC, we’re here to help with any questions about SGOs and tax benefits. Let’s work together to make the most of your charitable contributions this National Scholarship Month!
In honor of Women Entrepreneurship Day, we’re thrilled to feature the inspiring journey of Erica Ishida, the founder and CEO of Yellow Cedar Group. At Acumen MB LLC, we are proud to spotlight women entrepreneurs like Erica, whose resilience, vision, and leadership exemplify the strength and innovation that women bring to the business world. From Employee to Entrepreneur: Crafting a Vision Erica’s journey to entrepreneurship began with a transformative realization. After stepping down as President of Apple Growth Partners, she knew she wanted more than just another role in someone else’s company. “I did not want to work for an employer,” she shares. Instead, she sought to create a business that aligned with her passion – coaching and advising others to build personal and professional resilience. Yellow Cedar Group was born out of her desire to work with people she loves, on her own terms, and to empower others to thrive. Overcoming Challenges as a Woman Entrepreneur Interestingly, Erica finds that the challenges she faced were more prominent during her career as an employee rather than as an entrepreneur. “I was looked at and treated as ‘less than’ for being a woman, and at times, for being young in a senior role,” Erica recounts. But these experiences only fueled her determination. A mentor once told her, “Cream always rises to the top,” a mantra that encouraged her to bring her best self to every challenge. By working smarter and harder, Erica overcame obstacles, proving that dedication and authenticity are key to long-term success. Empowering Women Through Coaching and Mentorship At Yellow Cedar Group, Erica is passionate about coaching women executives, guiding them through their personal and professional challenges. “I try to create a safe space for women to open up about their challenges and dreams so we can work together toward their desired future,” she explains. Her coaching approach focuses on helping women recognize their potential, embrace self-care, and set clear intentions, demonstrating that with the right support, anything is possible. Pivotal Moments That Shaped Yellow Cedar Group The decision to start her own business was not without its difficulties. Leaving her previous employer under challenging circumstances tested her confidence. Yet, it was in these moments of uncertainty that she found strength from her network of trusted colleagues. “Each of these people reminded me of who I am, how powerful I am, and the value I bring,” says Erica. Their encouragement and initial support not only bolstered her confidence but also helped her secure the first clients that would pave the way for Yellow Cedar Group’s success. Core Values That Define Leadership Erica leads Yellow Cedar Group with four guiding principles: · Seek and Speak the Truth · Protect the Good · Relentlessly Pursue Potential · Minimize Suffering These values are not just words but the foundation of her coaching and advisory work. By aligning her business practices with these principles, Erica is able to create meaningful impact, both for her clients and the community. Supporting Women Entrepreneurs: A Collective Effort Women Entrepreneurship Day is a reminder of the incredible achievements of women business leaders like Erica Ishida. Her journey reflects the power of resilience, the importance of a strong support system, and the impact of leading with integrity. At Acumen MB LLC, we are committed to supporting women entrepreneurs in their quest to achieve their dreams. Whether it’s through sound financial advice or tax strategies, we’re here to help you thrive. Let Erica’s story be a testament to the strength and potential of women in business. This Women Entrepreneurship Day let’s celebrate and support the women leaders who are breaking barriers and driving change.
Fraud Awareness Week is the perfect opportunity to take stock of personal and business security measures. With evolving scams and fraud tactics, staying informed is crucial to safeguarding your finances and data. Here are key practices and tools – from credit freezes and fraud alerts to IRS PINs and cloud backups – that can help protect against fraud and keep your personal information secure. -Freeze Your Credit to Limit Access A credit freeze is one of the most effective tools for preventing identity theft. By restricting access to your credit report, a freeze makes it harder for fraudsters to open new accounts in your name. It’s free and can be easily set up through each of the three major credit bureaus (Equifax, Experian, and TransUnion). Remember to unfreeze your credit temporarily if you’re applying for a loan, mortgage, or new credit card. -Fraud Alerts Add an Extra Layer of Security Fraud alerts notify creditors to take extra steps in verifying your identity before opening any new accounts or making changes to existing ones. Unlike a credit freeze, fraud alerts don’t block access to your credit entirely, but they do act as an additional layer of protection. You can activate a fraud alert with any one of the credit bureaus, and they will notify the others on your behalf. -Secure Your Tax Filings with an IRS Six-Digit PIN The IRS Identity Protection PIN (IP PIN) is a six-digit code that helps protect against tax-related identity theft. If a fraudster tries to file a tax return using your Social Security number, they will be unable to proceed without this unique PIN. You can apply for an IP PIN through the IRS, adding a critical security layer to your tax information and protecting your refund. -Cloud Backup: A Safety Net for Your Data Backing up your data in the cloud is crucial for personal and business resilience against data loss. Cloud storage not only secures your files from hardware failures but also adds a layer of protection against ransomware and other cyberattacks. Choose reputable cloud providers that offer encrypted storage and ensure you’re using two-factor authentication to further protect your files. -Recognize and Avoid Online Scams Scammers are always finding new ways to deceive, and it’s essential to know the warning signs. Here are some tips for spotting common online scams: 1. Phishing Emails : Look out for emails claiming to be from reputable companies but containing odd links, urgent messages, or incorrect grammar. 2. Suspicious Links : Hover over links before clicking to check their legitimacy. Scammers often use links that look similar to authentic URLs but contain small changes. 3. Too-Good-to-Be-True Offers : Be wary of unbelievable deals or prizes, especially when they require you to provide personal or financial information upfront. 4. Fake Customer Service Numbers : Scammers sometimes publish fake support numbers. Always go directly to the official website of a company to verify contact information. Staying vigilant is key to fraud prevention. By implementing these practices, you not only protect your finances and personal data but also contribute to a safer financial environment for everyone. Fraud Awareness Week is a great reminder to review your security habits, update your passwords, and stay alert for any unusual activity.
