The Department of Labor (DOL) released its highly anticipated final rule regarding overtime for white collar workers.
This overtime rule update does not affect farm labor or blue collar workers.
In order to be paid salary exempt the employee must pass one of the exemption tests below:
Executive – Employees must manage a team or department, supervise two or more employees, and have the authority to hire or fire.
Administrative – Employees must perform non-manual work, manage “back office” general business operations, and have decision-making authority on significant matters.
Learned Professional / Creative Professional – As a learned professional, employees must perform intellectual tasks requiring advanced knowledge and specialized training in their fields. To pass the creative job duties test, employees must perform work requiring invention, imagination, originality, or talent in an artistic or creative field.
Computer Professional – Employees must be able to design, document, test, create or modify computer programs related to machine operating systems or system design specifications.
Outside Sales Employees – An employee’s primary role must be making sales outside of the employer’s business location.
As expected, the final rule will nearly double the salary threshold for exempt workers beginning January 1, 2025, with a smaller increase beginning on July 1, 2024. Below is a table with the scheduled increases:
Effective Date
Salary Threshold for Exempt Employees
Before July 1, 2024
$684 per week (equivalent to $35,568 per year)
July 1, 2024
$844 per week (equivalent to $43,888 per year)
January 1, 2025
$1,128 per week (equivalent to $58,656 per year)
Under the federal Fair Labor Standards Act, employees who work more than 40 hours a week get paid 1.5 times their regular pay for the extra hours. Almost all hourly workers are eligible for overtime pay but salaried workers only qualify if they earn below a set amount.
Employers should assess their workforce now and determine the following:
which employees meet the new salary thresholds,
which employees’ salaries should be increased to meet the new threshold,
which employees should be paid overtime, and
if the employees meet the new salary threshold, ensure those employees meet the duties test to be exempt from overtime requirements.
Payments of bonuses and commissions may affect overtime rates for hourly and non-exempt employees. Such additional pay may be excluded from the overtime rate only if:
Both the fact that the payment is to be made and the amount of the payment are at the sole discretion of the employer at or near the end of the period; and
The payment is not made according to any prior contract, agreement or promise causing an employee to expect such payments regularly.
Guaranteed salary needs to be 90% of the threshold amount. 10% of nondiscretionary commission/bonus can only make up 10% to hit threshold. You can do a lump sum (retro payment) at the end of the year to make up the difference. This payment has to be made with the 1st payroll of the following year. (But cannot be counted in that year.)
Highly compensated employees are exempt with an annual compensation of $132,964 per year for July 1st 2024. This goes up to $151,164 for January 2025.
A new program is available through the Nebraska Department of Economic Development (DED) and the GROW Nebraska Foundation. The NSBAA (Nebraska Small Business Assistance Act) program’s goal is to support those looking to start a small business or planning to expand a small business that was opened within the past five years. A small business is defined as a business with no more th five full-time equivalent employees based on hours worked (not including the business owner).
Program benefits include:
Grants for new and existing businesses
– New business startups – up to a $25,000 grant
– Existing businesses – up to a $12,500 grant
2. Funding to access professional services. These services may include assistance setting up an LLC, business planning, website development, tax return preparation, and more.
Eligibility for New Business Startups:
Business is less than two years old
Individual earnings < $55,000 in the previous calendar year
Personal net worth < $200,000 (not including personal residence)
Must not have ownership (>50%) in another business
Eligibility for Existing Businesses:
Business has been in operation five or fewer years
Gross revenues have not grown by more than 25% in the previous calendar year
Personal net worth < $200,000 (not including personal residence)
Must not have ownership (>50%) in another business
The tax filing deadline is fast approaching, which means time is running out to fund an IRA for 2023. If you had earned income last year, you may be able to contribute up to $6,500 for 2023 ($7,500 for those age 50 or older by December 31, 2023) up until your tax return due date, excluding extensions. For most people, that date is Monday, April 15, 2024.
You can contribute to a traditional IRA, a Roth IRA, or both. Total contributions cannot exceed the annual limit or 100% of your taxable compensation, whichever is less. You may also be able to contribute to an IRA for your spouse for 2023, even if your spouse had no earned income.
Traditional IRA contributions may be deductible
If you and your spouse were not covered by a work-based retirement plan in 2023, your traditional IRA contributions are fully tax deductible. If you were covered by a work-based plan, you can take a full deduction if you’re single and had a 2023 modified adjusted gross income (MAGI) of $73,000 or less, or married filing jointly with a 2023 MAGI of $116,000 or less. You may be able to take a partial deduction if your MAGI fell within the following limits.
2023 income ranges for a partial deduction for traditional IRA contributions:
Covered by a work-based plan and filing as:
Partial deduction if your MAGI is between:
No deduction if your MAGI is:
Single/Head of household
$73,000 and $83,000
$83,000 or more
Married filing jointly
$116,000 and $136,000
$136,000 or more
Married filing separately
$0 and $10,000
$10,000 or more
If you were not covered by a work-based plan but your spouse was, you can take a full deduction if your joint MAGI was $218,000 or less, a partial deduction if your MAGI fell between $218,000 and $228,000, and no deduction if your MAGI was $228,000 or more.
Consider Roth IRAs as an alternative
If you can’t make a deductible traditional IRA contribution, a Roth IRA may be a more appropriate alternative. Although Roth IRA contributions are not tax-deductible, qualified distributions are tax-free. You can make a full Roth IRA contribution for 2023 if you’re single and your MAGI was $138,000 or less, or married filing jointly with a 2023 MAGI of $218,000 or less. Partial contributions may be allowed if your MAGI fell within the following limits.
2023 income ranges for partial contributions to a Roth IRA:
Partial contributions are allowed if your MAGI is between:
You cannot contribute if your MAGI is:
Single/Head of household
$138,000 and $153,000
$153,000 or more
Married filing jointly
$218,000 and $228,000
$228,000 or more
Married filing separately
$0 and $10,000
$10,000 or more
Tip: If you can’t make an annual contribution to a Roth IRA because of the income limits, there is a workaround. You can make a nondeductible contribution to a traditional IRA and then immediately convert that traditional IRA contribution to a Roth IRA. (This is sometimes called a backdoor Roth IRA.) Keep in mind, however, that you’ll need to aggregate all traditional IRAs and SEP/SIMPLE IRAs you own — other than IRAs you’ve inherited — when you calculate the taxable portion of your conversion.
A qualified distribution from a Roth IRA is one made after the account is held for at least five years and the account owner reaches age 59½, becomes disabled, or dies. If you make an initial contribution — no matter how small — to a Roth IRA for 2023 by your tax return due date, and it is your first Roth IRA contribution, your five-year holding period starts on January 1, 2023.
IMPORTANT DISCLOSURES
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
This communication is strictly intended for individuals residing in the state(s) of NE. No offers may be made or accepted from any resident outside the specific states referenced.
Prepared by Broadridge Advisor Solutions Copyright 2024.
McMill CPAs & Advisors, one of the largest financial firms in Northeast Nebraska, is excited to announce the addition of a new shareholder, Lynndsy Beckmann. She became a shareholder alongside Jared Faltys, Clint Weeder and Andrew Steffensmeier on January 1, 2024.
Standing left to right: Clint Weeder, Jared Faltys, Lynndsy Beckmann, and Andrew Steffensmeier.
Raised in rural Bloomfield, Lynndsy now resides in Wisner with her husband, Chet, and their two children, Layla and Cade. Lynndsy keeps busy with her family by cheering on the Gators at sporting events and other activities with the kids. She also enjoys spending time at her family’s farm and camping with family and friends. Lynndsy joined the firm in 2015 as an intern and obtained her CPA license in 2017. In her nearly 10 years with the firm, Lynndsy has been driven to help her clients achieve financial success. She has established a strong client base that depends on her expertise and appreciates her friendly demeanor. McMill CPAs & Advisors is proud to have Lynndsy on our team of 14 CPAs & wealth advisors. Clint Weeder states, “We are really excited to add Lynndsy as a shareholder. She truly values her clients and enjoys helping them achieve success in their business and personal lives. She will play an integral part in shaping our firm in the future and continuing to finds ways to best serve our clients.”
Lynndsy has a Bachelor of Science degree in Accounting from Wayne State College. Lynndsy specializes in income tax planning and preparation, financial statement preparation and she is a registered investment advisor. Professionally, she is a member of the Nebraska Society of CPA’s and American Institute of CPAs. Locally, Lynndsy served as the treasurer for Mercy Meals of Nebraska from 2017-2023.
McMill CPAs & Advisors was established in 1948 and has enjoyed serving Norfolk and the surrounding communities over the years. The firm specializes in serving businesses, their owners and families, and the ecosystem those owners care about. Services provided by McMill include tax planning and preparation, wealth management, estate planning, payroll and bookkeeping services, QuickBooks consulting, auditing and assurance services and company retirement plans. McMill is a family firm that believes in the power of a close community supporting itself by caring for each other.
Investment Advisory Services provided through McMill Wealth Inc, a Registered Investment Advisor.
A solo 401(k) plan is an excellent way for sole proprietors to pack away retirement funds. In 2024, you can contribute up to $23,000 ($30,500 if you’re 50 or older) in pre-tax dollars. As the employer, you can also make matching contributions to your account.
SOLO 401(K) PLAN ADVANTAGES
Administrative simplicity is a major plus with Solo 401(k) plans. Nondiscrimination testing is not necessary and there are minimal filing requirements. Additionally, there are no “fidelity bonds” or traditionally required ERISA Title 1 notices for employees required.
THERE’S A CATCH
Before you choose a Solo 401(k), beware that you cannot have any employees (other than your spouse), so if you have employees or want to hire employees in the future, this plan is not for you. That’s because Solo 401(k)s automatically lose their qualified plan status as soon as a common-law employee meets the plan’s participation requirements.
If you have a Solo 401(k) and find you need to hire help, consult your professional advisor about amending plan documents, before they become eligible to participate. Otherwise, you risk disqualification, penalties, and contribution refunds. If you have two plans, remember elective deferral limits are by person, not by plan.
Many IRA and retirement plan limits are indexed for inflation each year. Several of these key numbers have increased once again for 2024.
How much can you save in an IRA?
The maximum amount you can contribute to a traditional IRA or a Roth IRA in 2024 will be $7,000 (or 100% of your earned income, if less), up from $6,500 in 2023. The maximum catch-up contribution for those age 50 or older remains $1,000. You can contribute to both a traditional IRA and a Roth IRA in 2024, but your total contributions cannot exceed these annual limits.
Can you deduct your traditional IRA contributions?
If you (or if you’re married, both you and your spouse) are not covered by a work-based retirement plan, your contributions to a traditional IRA are generally fully tax deductible.
If you’re married, filing jointly, and you’re not covered by an employer plan but your spouse is, you may generally claim a full deduction if your modified adjusted gross income (MAGI) is $230,000 or less (up from $218,000 or less in 2023). Your deduction is limited if your MAGI is between $230,000 and $240,000 (up from $218,000 and $228,000 in 2023) and eliminated if your MAGI is $240,000 or more (up from $228,000 in 2023).
For those who are covered by an employer plan, deductibility depends on income and filing status. If your filing status is single or head of household, you can fully deduct your IRA contribution in 2024 if your MAGI is $77,000 or less (up from $73,000 in 2023). If you’re married and filing a joint return, you can fully deduct your contribution if your MAGI is $123,000 or less (up from $116,000 in 2023). For taxpayers earning more than these thresholds, the following phaseout limits apply.
If your 2024 federal income tax filing status is:
Your IRA deduction is limited if your MAGI is between:
Your deduction is eliminated if your MAGI is:
Single or head of household
$77,000 and $87,000
$87,000 or more
Married filing jointly or qualifying widow(er)
$123,000 and $143,000 (combined)
$143,000 or more (combined)
Married filing separately
$0 and $10,000
$10,000 or more
Can you contribute to a Roth IRA?
The income limits for determining whether you can contribute to a Roth IRA will also increase in 2024. If your filing status is single or head of household, you can contribute the full $7,000 ($8,000 if you are age 50 or older) to a Roth IRA if your MAGI is $146,000 or less (up from $138,000 in 2023). And if you’re married and filing a joint return, you can make a full contribution if your MAGI is $230,000 or less (up from $218,000 in 2023). For taxpayers earning more than these thresholds, the following phaseout limits apply.
If your 2024 federal income tax filing status is:
Your Roth IRA contribution is limited if your MAGI is between:
You cannot contribute to a Roth IRA if your MAGI is:
Single or head of household
$146,000 and $161,000
$161,000 or more
Married filing jointly or qualifying widow(er)
$230,000 and $240,000 (combined)
$240,000 or more (combined)
Married filing separately
More than $0 but less than $10,000
$10,000 or more
How much can you save in a work-based plan?
If you participate in an employer-sponsored retirement plan, you may be pleased to learn that you can save even more in 2024. The maximum amount you can contribute (your “elective deferrals”) to a 401(k) plan will increase to $23,000 in 2024 (up from $22,500 in 2023). This limit also applies to 403(b) and 457(b) plans, as well as the Federal Thrift Savings Plan. If you’re age 50 or older, you can also make catch-up contributions of up to $7,500 to these plans in 2024 (unchanged from 2023). [Special catch-up limits apply to certain participants in 403(b) and 457(b) plans.]
The amount you can contribute to a SIMPLE IRA or SIMPLE 401(k) will increase to $16,000 in 2024 (up from $15,500 in 2023), and the catch-up limit for those age 50 or older remains $3,500. (Note that in 2024, new rules take effect that permit certain small employers to allow additional contributions.)
Plan type:
2024 deferral limit:
Catch-up limit:
401(k), 403(b), governmental 457(b), Federal Thrift Savings Plan
$23,000
$7,500
SIMPLE plans
$16,000
$3,500
Note: Contributions can’t exceed 100% of your income.
If you participate in more than one retirement plan, your total elective deferrals can’t exceed the annual limit ($23,000 in 2024 plus any applicable catch-up contributions). Deferrals to 401(k) plans, 403(b) plans, and SIMPLE plans are included in this aggregate limit, but deferrals to Section 457(b) plans are not. For example, if you participate in both a 403(b) plan and a 457(b) plan, you can save the full amount in each plan — a total of $46,000 in 2024 (plus any catch-up contributions).
The maximum amount that can be allocated to your account in a defined contribution plan [for example, a 401(k) plan or profit-sharing plan] in 2024 is $69,000 (up from $66,000 in 2023) plus age 50 or older catch-up contributions. This includes both your contributions and your employer’s contributions. Special rules apply if your employer sponsors more than one retirement plan.
Finally, the maximum amount of compensation that can be taken into account in determining benefits for most plans in 2024 is $345,000 (up from $330,000 in 2023), and the dollar threshold for determining highly compensated employees (when 2024 is the look-back year) increases to $155,000 (up from $150,000 when 2023 is the look-back year).
IMPORTANT DISCLOSURES
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
This communication is strictly intended for individuals residing in the state(s) of NE. No offers may be made or accepted from any resident outside the specific states referenced.
Prepared by Broadridge Advisor Solutions Copyright 2024.
Beginning in 2024: New E-file Regulations for Businesses (1099s)
The IRS and Department of the Treasury have amended the rules for filing returns and other documents electronically (e-file).These regulations will require certain filers to e-file beginning in 2024.
This rule change will likely affect your business if you file your own 1099s, since each 1099 is considered an information return. Your business will now be required to e-file them if you have more than 10 1099s or other returns (the prior threshold was 250).
LINCOLN – Nebraska’s minimum wage will increase to $12 per hour effective January 1, 2024. In accordance with an initiative passed by voters in November of 2022, the minimum wage will increase $1.50 each year through 2026, followed by an annual cost of living increase beginning in 2027. The minimum hourly wage for tipped employees is $2.13 per hour. Employers are responsible for ensuring that wages and tips combined equal at least the minimum wage.
The following minimum wage amounts are scheduled:
January 1, 2024: $12 per hour
January 1, 2025: $13.50 per hour
January 1, 2026: $15 per hour
January 1, 2027: The minimum wage will increase based on the cost-of-living increase as measured by the Consumer Price Index.
Labor law specialists are available to answer questions from workers and employers regarding wages in Nebraska and may be contacted at 402-471-2239 or ndol.laborstdrdsinquiries@nebraska.gov.
The financial markets have had their moments in 2023. And if you haven’t checked your portfolio and retirement plan asset allocations in a while, you could be in for a jolt. Your allocations may be out of line with your current investment goals, timeline and tolerance for risk, but you can fix the problem by rebalancing asset classes.
TO REBALANCE OR NOT?
Let’s say you set or rebalanced your allocation at the beginning of 2023. If your investment time frame and risk tolerance are basically the same currently, you have it easy. Compare your current asset allocation to the allocation you set in January.
Generally, if one or more of the asset categories varies by more than 5%, you should consider rebalancing the weight in each asset class to better match your investment strategy.
KNOW YOURSELF
If your investment goals or risk tolerance have changed significantly, you’ll probably want to develop a new allocation strategy. The objective is to invest aggressively enough to meet your timeline and goals, but not make you nervous.
CONSULT PROFESSIONALS
Work with your financial professional to evaluate the need to rebalance your portfolio at least annually. Your tax advisor can check for tax repercussions before you make any moves.
With the holiday season upon us and the end of the year approaching, we pause to give thanks for our blessings and the people in our lives. It is also a time when charitable giving often comes to mind. The tax benefits associated with charitable giving could potentially enhance your ability to give and should be considered as part of your year-end tax planning.
Tax deduction for charitable gifts
If you itemize deductions on your federal income tax return, you can generally deduct your gifts to qualified charities. This may also help increase your gift.
Assume you want to make a charitable gift of $1,000. One way to potentially enhance the gift is to increase it by the amount of any income taxes you save with the charitable deduction for the gift. At a 24% tax rate, you might be able to give $1,316 to charity [$1,000 ÷ (1 – 24%) = $1,316; $1,316 x 24% = $316 taxes saved]. On the other hand, at a 32% tax rate, you might be able to give $1,471 to charity [$1,000 ÷ (1 – 32%) = $1,471; $1,471 x 32% = $471 taxes saved].
However, keep in mind that the amount of your deduction may be limited to certain percentages of your adjusted gross income (AGI). Your deduction for gifts to charity is limited to 50% (currently increased to 60% for cash contributions to public charities), 30%, or 20% of your AGI, depending on the type of property you give and the type of organization to which you contribute. Charitable deductions that exceed the AGI limits may generally be carried over and deducted over the next five years, subject to the income percentage limits in those years.
Make sure to retain proper substantiation of your charitable contributions. In order to claim a charitable deduction for any contribution of cash, a check, or other monetary gift, you must maintain a record of such contributions through a bank record (such as a cancelled check, a bank or credit union statement, or a credit-card statement) or a written communication (such as a receipt or letter) from the charity showing the name of the charity, the date of the contribution, and the amount of the contribution. If you claim a charitable deduction for any contribution of $250 or more, you must substantiate the contribution with a contemporaneous written acknowledgment of the contribution from the charity. If you make any noncash contributions, there are additional requirements.
Year-end tax planning
When making charitable gifts at the end of the year, you should consider them as part of your year-end tax planning. Typically, you have a certain amount of control over the timing of income and expenses. You generally want to time your recognition of income so that it will be taxed at the lowest rate possible, and time your deductible expenses so they can be claimed in years when you are in a higher tax bracket.
For example, if you expect to be in a higher tax bracket next year, it may make sense to wait and make the charitable contribution in January so that you can take the deduction next year when the deduction results in a greater tax benefit. Or you might shift the charitable contribution, along with other deductions, into a year when your itemized deductions would be greater than the standard deduction amount. And if the income percentage limits above are a concern in one year, you might consider ways to shift income into that year or shift deductions out of that year, so that a larger charitable deduction is available for that year. A tax professional can help you evaluate your individual tax situation.
A word of caution
When making charitable contributions, be sure to deal with recognized charities and be wary of charities with names that sound similar to reputable charitable organizations. It is common for scam artists to impersonate reputable charities using bogus websites as well as misleading email, phone, social media, and in-person solicitations. Check out the charity on the IRS website, irs.gov, using the Tax Exempt Organization Search tool. And remember, don’t send cash; contribute by check or credit card.
IMPORTANT DISCLOSURES
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
This communication is strictly intended for individuals residing in the state(s) of NE. No offers may be made or accepted from any resident outside the specific states referenced.
Prepared by Broadridge Advisor Solutions Copyright 2023.
