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December 2019

Cuts to SNAP Benefits Strike in 2020

You may have heard that there will be significant changes to the Supplemental Nutrition Assistance Program (SNAP) in 2020, but sometimes the details of those changes are hard to figure out.

The good news, if there can be any, is that these changes don’t go into effect until April 1, 2020, so if you’re one of the nearly 700,000 people affected by the changes then you have a little more time to plan for them.

What is SNAP?

The Supplemental Nutrition Assistance Program (SNAP) is designed to help low-income families put food on the table. It was previously known as food stamps.

According to the site Feeding America, more than 9.5 million families with children are on SNAP. Additionally, “…in 2015, SNAP lifted 4.6 million Americans above the poverty line, including 2 million children and 366,000 seniors.”

What are the changes to SNAP in 2020?

There’s one key change that will have a sweeping effect on nearly 700,000 people. Under the current system, benefits are provided for three months to able-bodied adults without dependents. Those benefits can be extended at the state’s discretion if the person is not working a minimum of 20 hours per week or participating in a training program. This extension usually happens where there is high unemployment.

Under the new rules, states will only be able to issue a waiver if the unemployment rate is over 6 percent in the area where the applicant lives. Waiver applications will require specific details and data for approval. In other words, it’s going to be even harder to get those benefits extended past the three-month cap.

Who will be affected by the changes to SNAP in 2020?

This change is designed to impact people who are able to work and have no dependents. The changes are not expected to impact people over the age of 50, disabled, pregnant or people with dependents.

Many of the people who will lose benefits are considered low-wage workers and people who work in the retail or food service industry where hours vary from week to week and are never guaranteed.

SNAP utilities changes will help some, hurt others

There are two other changes to the SNAP program that are being considered.

The first is expected to hurt many households while helping a small number of others. According to the site New Food Economy, “The change is expected to take food stamps from up to 8,000 households and reduce payments for one in five families, though it is also projected to increase payments for 16 percent of families.”

Currently, SNAP recipients receive a little more help if a large portion of their paychecks goes to pay for things like rent and utilities. For some states, it’s hard to keep track of a specific number for each household, so the state creates a flat number for all households. Under the new proposal, a nationwide standard will be used.

Some households will see an increase in benefits because of this change, but others will see a decrease in benefits, and some could lose their benefits altogether.

This is a change that has not gone into effect yet but could go into effect in 2020. The public comment period on this suggested change closed in early December 2019. There’s no word on when the change will go into effect.

SNAP changes affecting green cards delayed

The Trump Administration also tried to enact new rules that would require immigration officials to look at whether an applicant uses SNAP when processing green cards. The rules were set to go into effect in October 2019, but multiple states have filed lawsuits against the changes. At this time, the issue is tied up in court and will not go into effect until the court rules.

You can find the latest details on the issue here.

Why Hiring an Ex-Felon Might Be the Right Move in 2020

With the national unemployment rate at a low, the employee pool may look like it is getting sparse. However, that may be because you’re not looking in the right employee pool.

2020 should be the year you consider hiring ex-felons.

For many employers, it’s tough to think about trusting an ex-felon as someone who will help your business succeed, but the federal government is doing everything it can to help employers see that ex-felons can be an asset instead of a hindrance.

The Work Opportunity Tax Credit (WOTC)

The government has created the WOTC for companies willing to hire individuals with employment barriers, such as ex-felons. If your business employs an ex-felon you can qualify for the WOTC. We wrote a whole blog post about WOTC here.

The cool thing about a tax credit is that you receive a dollar for dollar match on your taxes up to a certain amount. That means if you pay that employee $1,200 in 2020, you should be allowed to deduct that $1,200 from your taxes.

The Federal Bonding Program

To make employers feel safer about hiring ex-felons, the federal government has created a Federal Bonding Program. The program is designed to protect the employer against loss if an employee that is an ex-felon commits a fraudulent or dishonest act.

The bonds are free and are part of an incentive to hire ex-felons. There’s a $5,000 limit per employee with a $0 deductible. The bond covers the employee’s first six months of employment with your company.

For more details, you can visit the Bonds 4 Jobs website.

City and State Benefits

In addition to the national benefits being offered for hiring ex-felons, some cities and states are also offering incentives to businesses that hire people coming out of incarceration. The City of Philadelphia, for example, offers a cash incentive to any business that hires someone coming out of prison, provided the company meets the eligibility requirements.

Be sure to look into what your city and state offer businesses that hire ex-felons. You could see more rewards than just the federal ones.

States are Starting to Recognize Unfairness in Occupational Licensing

You may think that because your employees need a special license to do their work, ex-felons are out of the question. Until recently, most states have immediately rejected license applications for ex-felons. That’s changing.

More and more states are starting to realize that licenses to ex-felons should and can be handed out on a case by case basis. Check your state to see if they offer waivers for occupational licenses. The one thing holding you back from hiring an ex-felon may not be an issue at all.

Major Companies See the Benefit

More and more major corporations are seeing the benefit of considering ex-felons in hiring practices. Many companies have removed the question about an applicant’s criminal past from their applications. More still have promised to give a potential employee a fair chance before asking about criminal history.

According to the website, Jail to Job, major corporations like Walmart, Google, Coca-Cola, Best Buy, Starbucks, Target, and Under Armour have made the Fair Chance Pledge, a promise to hold off on criminal history questions until later in the hiring process.

It is possible that hiring an ex-felon is not an avenue that you want to pursue for your company, but it’s also possible you may find that some of the best employees you hire in 2020 will be ex-felons.

Disclaimer: The advice offered in this blog post is a generalization and may or may not work in your specific situation. Most specifically, the WOTC depends on the company, the employees and other factors. If you think you qualify for the WOTC or other tax credits, please contact Tax Credit Group so we can cater our advice to your situation.

10 Things Small Business Owners Can Do to Get a Head Start on Taxes

It’s hard to think about taxes when the deadline is so far away but now may be the best time to get to work on them. Late December and early January tend to be slow months for small businesses, which is why they’re a great time to get a jump on work that will pop up later down the road. You know you’ll have to deal with the taxes eventually, so why not start now?

Remember, the tax period usually refers to the calendar year, which means once 2019 is done those numbers are set.

Preparing for the Work Opportunity Tax Credit (WOTC)

If you’re claiming one or more employees as part of the WOTC, then there are some extra numbers that your tax accountant needs. He or she will need the total hours worked by those employees in 2019 and the amount you paid to all employees who qualify for the tax credit.

While you’re calculating out that number, don’t forget that you can receive the credit for 12 full months of employment, so if you have an employee that you hired on July 1, 2018, you can still claim six months of work in 2019.

Calculating what you paid in taxes

Another item you’re allowed to deduct as a small business owner is the amount you paid in employment taxes. Every paycheck, you’re paying out social security taxes, Medicare, federal and state disability. These payments are tax deductible.

If you have a person in charge of payroll, they will likely get these numbers for you. However, if you’re doing it yourself, it might be a good idea to run the numbers at the end of the year so you have them ready for your accountant come tax time.

Qualified Business Income

This is one you might want to talk over with your accountant, but changes to the tax code in 2017 created the opportunity for small businesses to deduct what’s called Qualified Business Income (QBI). That means you may be able to deduct up to 20 percent of your qualified business income.

C corporations and a few other small businesses do not qualify. If you want more details on QBI, the IRS has a longer write up here.

Vehicle expenses

A lot of small businesses use a vehicle, whether personal or company owned, to do work for the business. The cost of operating that vehicle is deductible. Remember, deductible means it’s a partial deduction from your taxes, not a dollar for dollar match like a tax credit. Still, every bit of savings counts.

You should have kept records throughout the year for the cost of gasoline, oil changes, etc. If not, get out the calculator and start digging through your records.

Your other option is to use the IRS standard mileage rate of 58 cents per mile in 2019. That rate covers the cost of gas, oil, and wear and tear on your vehicle. You’ll still need to go back and calculate all the miles you drove in 2019 to account for that 58 cents per mile.

Depreciation schedule

This is a chart that you should have already or that your accountant has worked out. If not, you may want to work with your accountant to create one.

A depreciation schedule should include all of the assets of your business such as machinery, equipment, and vehicles, when they were purchased and a schedule of how much you can depreciate per year. You can add any new purchases from 2019 to this schedule and make sure you have a new depreciation timeline for each item.

Rent

The IRS allows small businesses to deduct the rent they pay for property used as part of their business. This works on a smaller scale if you work out of a home office. It’s a quick calculation to do, but it’s a good one to get out of the way so you’re not trying to figure it out with the tax deadline looming.

Insurance

Just like rent, what you pay insurance it is also deductible. Make sure you’re tracking all the payments you make for insurances such as business, flood, fire, and vehicle.

Interest

Another calculation you can get out of the way fairly quickly is interest. The IRS will allow you to deduct interest expense as a business expense provided that money was borrowed for business activities.

Utilities

Another good item to get a jump on is calculating all the money you paid out in utilities last year. Everything from electricity to phone to internet to water and sewage is deductible.

Professional Fees

The money you pay to the pros like your lawyer and your accountant is also something you can deduct from your taxes. The IRS sees professional fees like other business operation expenses and so it tries to give you a break.

If you want to see a longer list of all the things the IRS allows you to deduct, you can check out Publication 529.

Disclaimer: These deductions and tax credits are items that almost all businesses can count on, but your specific situation may not be a typical one. That’s why talking to us here at Tax Credit Group or speaking with your personal accountant is a must. That is the only way you can be sure you’re getting the proper information for your specific situation.

Holiday Charitable Giving Advice for Small Businesses

As 2019 draws to a close, many companies are looking for ways to give back to their communities and maybe get a little tax advantage in return. But there are some things you should consider before you decide how much you’re going to donate and who you’re donating to.

Choosing the right charity

The first thing you want to focus on is choosing the right charity. You want to make sure the company you’re donating to is a nonprofit. Usually, nonprofits file under tax code 501(c)(3), which is the internal revenue code that allows for nonprofit tax exemption. These companies indicate on their website their 501(c)(3) status, so look around for it. If you can’t find it, the IRS has a database search that you can use to determine if the company you want to donate to files as a 501(c)(3).

Just because it’s a nonprofit, it does not mean that all the money you donate goes to the cause you’re choosing to support. You want to make sure that a large portion of the money you donate goes to the people the nonprofit is trying to help and not to administrative costs. Sites like Charity Navigator and the Better Business Bureau’s Wise Giving Alliance will help you see what percentage of every dollar a charity uses towards its cause.

After that, choose a charity that aligns with the beliefs of your company and your employees.

It’s a tax deduction, not a tax credit

Remember that when you donate to a charity, it’s considered a tax deduction not a tax credit. We have a whole article on the difference between a tax deduction and a tax credit here, but the basic idea is that a tax credit is a dollar for dollar write off on your taxes, while how much you receive as a tax deduction will vary based on your tax bracket.

It’s probably worth less than you think it is

If you’re looking to donate goods, remember you will never be able to deduct what you initially paid for the item. The IRS will only allow you to deduct what it calls Fair Market Value, in other words, what the item is worth after depreciation or use. The IRS website has more details on Fair Market Value here.

The other thing you want to consider is you need to have some proof that the item is worth what you’re writing off. For example, if you donate a car, then you need to use something like the Kelly Blue Book to prove that the car you donated is worth the amount you’re deducting. If you’re donating something else, you may need an independent appraisal before you choose a value to deduct.

How much should you give?

Business News Daily tackled this issue a few months ago and here are two things you should think about before you decide how much to donate:

  • “The tax benefit you receive will be based on how much you give and your business’s revenue.”
  • “Don’t donate an amount that will sink your business. Be smart as well as charitable.”

As we stated earlier, a tax deduction is much different than a tax credit. You will not receive a dollar for dollar break on your taxes, so you must understand that any donation must be money that you can afford to give to a charity without any promise of a return.

Talk to your tax adviser

Whether you donate $1 or $1,000, be sure you talk to your Certified Public Accountant or another tax specialist before you donate. The 2017 Tax Cuts and Jobs Act made the tax code more difficult to navigate in the area of charitable giving and you may not receive the level of deductions you anticipate unless you talk to a professional first.

How to Celebrate International Day of Persons with Disabilities

December 3, 2019, was International Day of Persons with Disabilities and it’s a good time to recognize your employees with disabilities and share with the rest of your team why disability does not define a person.

What is International Day of Persons with Disabilities?

International Day of Persons with Disabilities was proclaimed in 1992 by the United Nations General Assembly. The day was designated for December 3 of each year.

According to UN General Assembly resolution 47/3, the day “…aims to promote the rights and well-being of persons with disabilities in all spheres of society and development, and to increase awareness of the situation of persons with disabilities in every aspect of political, social, economic and cultural life.”

Why We Celebrate International Day of Persons with Disabilities

One of the main goals of International Day of Persons with Disabilities is inclusion.

According to the Southeast Americans with Disabilities Act Center, “A major focus of the Day is practical action to mainstream disability in all aspects of development, as well as to further the participation of persons with disabilities in social life and development on the basis of equality…promote public awareness of barriers to the full inclusion of persons with disabilities in their societies.”

How to celebrate International Day of Persons with Disabilities

The website, IDPWD.org, has a whole list of ideas for schools, businesses, and groups to recognize the day. It doesn’t matter if your business is big or small, there’s always something you can do.

Host a breakfast or brunch

Buy some breakfast and invite all your employees to enjoy the food. If you have the opportunity, invite an advocate or person with a disability to speak to the group while they eat.

You can do the same thing with a luncheon.

Offer a discount

If you’re a business that sells something, consider offering a discount to people with disabilities, their families, and their caregivers.

Host a fundraiser

If you have the means or the space, host a fundraiser for a local non-profit that helps people with disabilities.

Spread awareness

The IDPWD.org also suggests that you use your place of business or social media channels to spread awareness of International Day of Persons with Disabilities. Not everyone knows or realizes that the day exists or that it takes place on December 3 of each year.

The more you spread awareness; the more likely people are going to search out content to learn more about the day.

There’s also downloadable content on the IDPWD website that will help your business show its support for International Day of Persons with Disabilities. You can find it here.

Finally…

One of the biggest things you can do for International Day of Persons with Disabilities is take any action at all. Whether it’s simply making your employees feel special and appreciated or something larger like a fundraiser or luncheon.

Doing something is the first step.

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