On September 29, President Trump signed the Disaster Tax Relief and Airport and Airway Extension Act of 2017 (the Disaster Act) into law. The legislation includes several new tax breaks for Hurricane Harvey, Irma, and Maria victims and a few tax breaks for everybody. Unless you or your business was directly affected by one of these hurricanes, the changes in the rules for charitable efforts will probably be of the most interest to you. This letter summarizes what we think are the key points in the Disaster Act.

Suspension of Charitable Deduction Percentage Limitation. The amount of charitable donations that an individual can deduct in any year is limited to a percentage of your Adjusted Gross Income (AGI). In general, cash donations to IRS-approved public charities cannot exceed 50% of your AGI. Any excess donations can be carried forward for up to five years. Under the Disaster Act, you can elect to deduct qualified contributions that equal up to 100% of your 2017 AGI when combined with other garden- variety donations. A qualified contribution is generally defined as a cash charitable donation made between 8/23/17 and 12/31/17 to a public charity for relief efforts in the Hurricane Harvey, Irma, or Maria disaster areas. To claim this break, you must receive contemporaneous written acknowledgement from the charity stating that the contribution was (or is to be) used for such efforts. This break is available to all individual taxpayers regardless of their location.

Suspension of Charitable Deduction Phaseout Rule. For 2017, your itemized deductions (other than any writeoffs for medical expenses; investment interest; and casualty, theft, and wagering losses) are reduced by 3% of your AGI in excess of $313,800 for married filing joint, $261,500 for single, $287,650 for head of household and $156,900 for married filing separately. The Disaster Act suspends this unfavorable deduction phaseout rule for qualified contributions (as defined above). This means your qualified contributions can generally be deducted—without any reduction under the phaseout rule—up to the point where 100% of your AGI is offset by charitable donations. This break is available to all individual taxpayers regardless of their location.

Liberalized Charitable Deduction Rules for Cash Donations by C Corporations. In general, charitable contributions are not deductible by a C corporation to the extent they exceed 10% of corporate taxable income. Under the Disaster Act, a C corporation can elect to deduct “qualified contributions” (defined above) of up to 100% of taxable income reduced by other allowable charitable contributions. To claim this break, the corporation must receive contemporaneous written acknowledgement from the charity stating that the contribution was (or is to be) used for such efforts. This break is available to all C corporation taxpayers regardless of their location.

Special Relief Provisions for Personal Casualty Losses. Individuals who itemize their deductions can deduct a limited amount of uncompensated personal casualty losses. Generally, the casualty loss (reduced by applicable insurance proceeds) must first be reduced by $100 per casualty event and then by 10% of your AGI. So, your uncompensated personal casualty loss is deductible only to the extent it exceeds 10% of your AGI, plus $100. The Disaster Act provides special relief provisions for qualified disaster-related personal losses—hurricane-related losses that arose in: (1) the Hurricane Harvey disaster area after 8/22/17, (2) the Hurricane Irma disaster area after 9/3/17, or (3) the Hurricane Maria disaster area after 9/15/17. For those losses, the Disaster Act increases the $100 reduction amount to $500, but it also waives the normal 10%-of- AGI floor. This means these qualified losses are deductible to the extent they exceed $500. You can also deduct the qualified losses even if you don’t itemize or are
subject to alternative minimum tax.

Special Relief Provisions for Qualified Hurricane Distributions. The Disaster Act provides a number of relief provisions for qualified hurricane distributions. For this purpose, a qualified hurricane distribution is a distribution from tax-favored retirement plans, including IRAs, made—(1) after 8/22/17 and before 1/1/19 to an individual whose principal place of abode on 8/23/17 was in the Hurricane Harvey disaster area and who sustained economic loss due to Harvey, (2) after 9/3/17 and before 1/1/19 to an individual whose principal place of abode on 9/4/17 was in the Hurricane Irma disaster area and who sustained economic loss due to Irma, or (3) after 9/15/17 and before 1/1/19 to an individual whose principal place of abode on 9/16/17 was in the Hurricane Maria disaster area and who sustained economic loss due to Maria.

The Disaster Act provides the following relief for qualified hurricane distributions:

1. Penalty-free Treatment. Up to $100,000 of qualified hurricane distributions are exempt from the premature withdrawal penalty that applies to most retirement account withdrawals taken before age 59½.
2. Three-year Recontribution Period. Qualified hurricane distributions can be recontributed to eligible retirement plans and IRAs tax-free. This amounts to tax-free rollover treatment, and you can arrange for this beneficial result any time during the three-year period after you receive a qualified distribution.
3. Three-year Income Averaging. A qualified hurricane distribution that is not recontributed (see item 2 above) is taken into the recipient taxpayer’s gross income ratably over three years—beginning with the year in which the distribution is received.

Tax-free Recontributions for Canceled Home Purchases. Any individual who took out a “qualified distribution” to buy or build a home can roll the money back into an eligible retirement plan (including an IRA) between 8/23/17 and 2/28/18 with no tax harm done. In other words, tax-free rollover treatment will apply to such recontributed amounts. A qualified distribution for this purpose means a hardship distribution from a qualified retirement plan or a qualified first-time homebuyer distribution from an IRA that was: (1) received after 2/28/17 and before 9/21/17 and (2) intended for the purchase or construction of a principal residence within the Hurricane Harvey, Irma, or Maria disaster areas that didn’t take place due to Harvey, Irma, or Maria.

Larger Retirement Plan Loans Allowed. The Disaster Act generally increases the amount that can be taken out as a tax-free loan from a qualified retirement plan to the lesser of $100,000 or your vested account balance. This special rule applies to plan loans made to any “qualified individual” beginning on 9/29/17 and ending on 12/31/18. Under the normal rules, plan loans generally cannot exceed $50,000 or half of your vested account balance. A qualified individual for this purpose is any person whose principal place of abode: (1) on 8/23/17 was in the Hurricane Harvey disaster area and who sustained economic loss due to Harvey, (2) on 9/4/17 was in the Hurricane Irma disaster area and who sustained economic loss due to Irma, or (3) on 9/16/17 was in the Hurricane Maria disaster area and who sustained economic loss due to Maria.

Retirement Plan Loan Repayments Can Be Delayed. In general, retirement plan loans must be repaid within five years to be tax-free (home loans can have longer terms). The Disaster Act offers relief to any “qualified individual” (as defined above) who has a plan loan outstanding on or after the “qualified beginning date” with repayment that is otherwise due between the qualified beginning date and 12/31/18. The due date can be delayed for one year, and subsequent loan repayments will be adjusted
to reflect the delay. Qualified beginning dates are — 8/23/17 for a qualified Hurricane Harvey individual, 9/4/17 for a qualified Hurricane Irma individual, and 9/16/17 for a qualified Hurricane Maria individual. New Employee Retention Credit. This new credit of up to $2,400 per employee is intended to encourage employers affected by Hurricanes Harvey, Irma, or Maria to retain and continue paying their employees until the end of this year. Contact us for details.

Conclusion. As we promised, the Disaster Act contains something for just about everyone. This letter only scratches the surface of all the new rules. Please call us if you have questions or want more information.

Provided by Business Wire. 

National Accounting Firm’s Leaders Take Pies to Face for Children’s Charity

May 31, 2017 10:00 AM Eastern Daylight Time

CHICAGO–(BUSINESS WIRE)–BDO USA, LLP, one of the nation’s leading accounting and consulting firms, recently raised $75,000 during a two-week employee fundraising drive in support of Red Nose Day, the Comic Relief charity dedicated to ending child poverty.

BDO professionals took part in red-themed activities across the firm, such as bake sales, casual dress days and most notably “Pie-in-the Face Challenges” to raise funds that support projects to ensure kids are safe, healthy and educated.

This initiative is part of BDO USA’s year-round BDO Counts initiative – the firm’s ongoing community outreach program that challenges BDO professionals across the country to give back to the communities in which BDO does business.

Janet Scardino, CEO Comic Relief Inc. said, “BDO has been incredible at bringing their employees together in support of Red Nose Day – getting creative, having fun and giving back.

It’s been inspiring to see their engagement and donations grow so exponentially each year. We are so very grateful for the enthusiastic support of their entire team across the country.”

BDO USA CEO, Wayne Berson, issued a challenge to the firm’s office managing partners (OMPs) to set fundraising goals for employees in their offices and agree to be “Pie-ed in the Face” should staff reach that target.

Last week on May 25 – Red Nose Day – BDO’s “pie-ous” employees took good natured delight in seeing Mr. Berson and many of the firm’s OMPs splattered with pies around the country as the firm far exceeded its goals.

“As a firm, we are very active in community service and charitable causes throughout the year, and National Red Nose Day has become a major part of our fundraising calendar,” said Wayne Berson. “We want to thank all of the managing partners who took on this challenge with such a great sense of humor.

Most importantly, we want to thank our professionals for their unbelievable charitable spirit in driving this exceptionally successful initiative to benefit children in need.”

About Red Nose Day

Red Nose Day is a fundraising campaign run by the non-profit organization Comic Relief Inc., a registered U.S. 501(c)(3) public charity. Red Nose Day started in the U.K., built on the foundation that the power of entertainment can drive positive change, and has raised over $1 billion globally since the campaign’s founding in 1988.

Red Nose Day launched in the U.S. in 2015 with a mission to raise money and awareness to end child poverty, and has raised over $95 million to date for the cause. Money raised goes to the Red Nose Day Fund, which supports programs that keep children in need safe, healthy and educated, both in America and abroad.

Beneficiaries include the Boys & Girls Clubs of America; charity: water; Children’s Health Fund; Covenant House; Feeding America; Gavi, the Vaccine Alliance; Laureus Sport for Good; National Council of La Raza; Oxfam America; Rotary/End Polio Now; Save the Children; and The Global Fund.

Since launching in the U.S., Red Nose Day has received generous support from millions of Americans, hundreds of celebrities and many outstanding partners, including Walgreens, NBC, Mars, and the Bill & Melinda Gates Foundation.

About BDO USA

BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies.

For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through more than 60 offices and more than 400 independent alliance firm locations nationwide.

As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of more than 1,400 offices in over 150 countries.

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information, please visit: www.bdo.com.

Contacts
WalshPR
Jerry Walsh, 631-491-9008
jerry@prwalsh.com

“It’s amazing. Life changes very quickly, in a very positive way, if you let it.”– Lindsey Vonn, Athlete

The cost of higher education continues to rise. In the United States and Canada, borrowers owe more than 1.2 trillion dollars in student loan debt. More than 7 million borrowers are in default. It is important for students and potential co-borrowers to understand the various types of loans, as well as the resources available during repayment.

Loans

Subsidized loans are awarded to students based on their financial need. While the student is in school, the federal government pays any interest on the loan. Therefore, subsidized loans do not gain any interest before the student enters repayment. This will save the borrower a great deal of money over the course of repayment.

Unsubsidized Loans

Unsubsidized loans begin accruing interest when the loan money is first disbursed. If this interest goes unpaid, it will be added to the loan’s principal. This means the borrower will pay interest on the principal of the loan, as well as any interest that has already been added to the balance of the loan. This will cost the borrower a lot of money in additional interest over time.

Credit Cards

Credit Cards have become readily available and widely used by college students in recent years. The interest rates on credit cards are generally higher than those on both subsidized and unsubsidized student loans. In addition, borrowers must make monthly payments. Failure to make payments on credit cards can lead to a poor credit score and can affect an individual’s ability to obtain further credit or even find a job.

Repayment Grace Periods

Repayment Grace Periods are offered by many student loans before repayment begins. Make sure you know the grace period duration for your loans so you are prepared when payments become due.

Discounts

Discounts may be available for borrowers who set up auto-payment for their account. Many lenders also offer reduced interest rates for borrowers who make timely payments.

Consolidation

Consolidation may benefit some borrowers. Consolidating loans with one lender allow the borrower to make one monthly payment. It may also be possible to lock in a lower interest rate with a consolidated loan. Borrowers should beware, since consolidating student loans may exempt them from some beneficial repayment programs.

Default

Default, the failure to make payment on student loans, may have serious consequences. If you default on your loan, your remaining balance and interest may become due in full and you may lose access to modified repayment plans. Also, additional fees and penalties may be added to your loan, your credit score and history may be damaged, your wages may be garnished and your tax refunds may be withheld. Your lender will also seek to collect, using all of the above methods, from your co-borrower.

Avoiding Default

Avoid default by contacting your lender if you are unable to make your scheduled loan payments. It may be possible to alter your payment due date or the structure of your repayment plan to better accommodate your budget. If you are experiencing financial hardship, you may be eligible for deferment or forbearance.

As a Mortgage and Reverse Mortgage expert with almost 11 years in the industry, I pride myself on being a true consultant to guide and educate homeowners accordingly. I provide straight-forward and easy to understand information to help my clients make an informed decision on the best option for them.

Please contact me if you have any questions about a reverse mortgage or mortgages in general. I am licensed in NJ, NY, CT, PA and FL and would be happy to assist you or anyone you know.

Thank you!

Marc C. Demetriou, CLU, ChFC
Branch Manager/Mortgage Consultant
Residential Home Funding Corp.
39 Main Street | Bloomingdale, NJ 07403
Phone: 973-492-0117 | Fax: 973-492-1108 | Cell: 201-286-3386