Bring Home a Tax Credit for Adoption

When you adopt a child, you could bring home more than a bundle of joy. You may also be in line for a valuable tax credit.

For 2021, a tax credit of up to $14,440 for adoption of a special needs child can come in handy for qualified parents facing the daunting costs of adoption (up from $14,300 for 2020). For other adoptions the credit is equal to qualified adoption expenses, up to a maximum of $14,440. (more…)

4 Tax-Saving Credits for Families

Families may be able to cash in on various tax credits to offset their tax liability on a dollar-for-dollar basis. Plus, recent legislation has enhanced some of the credits for 2021. Here’s an overview of four key tax credits for families that are currently on the books. (more…)

Not-for-Profit Reporting of Gifts-in-Kind

The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) 2020-07 with the goal of increasing transparency about contributed nonfinancial assets for not-for-profit entities. Examples of nonfinancial assets covered under this ASU include:

• Donated legal and accounting services
• Donated medicine
• Donated rental space
• Donated travel
• Donated equipment
• Donated radio, TV and digital advertising

The ASU does not apply to contributed securities or other financial assets.

Under the new standard, material or significant contributions of nonfinancial assets will be more clearly presented on the face of the financial statements with a separate breakout. The terminology to be utilized can be at the discretion of the entity and may include “Contributed nonfinancial assets” or the historically utilized “Gifts-in-kind.” Additional disclosures will be required to further disaggregate such contributed nonfinancial assets by major type including amount of revenues recognized, utilization of programs/activities, donor restrictions and valuation techniques and inputs utilized.

This ASU is effective for annual periods beginning after June 15, 2021 and early adoption is permitted. Therefore, organizations with June 30 year-ends will be required to adopt and implement this standard for the year ending June 30, 2022.

Virginia Unitary Business Reporting Requirement – Due July 1, 2021

A provision of Virginia’s budget bill requires all corporations subject to Virginia income tax to file a one-time report with Virginia Tax by July 1, 2021. This report will show the difference between the amount of tax the corporation would pay if it filed as part of a unitary combined group and the amount of tax based on how they currently file.

What is a unitary combined group?

Section 3-5.23(A)(2) of HB 1800 defines a “unitary business” as a “a single economic enterprise made up either of separate parts of a single business entity or of a commonly controlled group of business entities that are sufficiently interdependent, integrated, and interrelated through their activities so as to provide a synergy and mutual benefit that produces a sharing or exchange of value among them and a significant flow of value to the separate parts.”. A “unitary business” includes certain partnership interests but does not include entities subject to Virginia’s insurance premiums tax or bank franchise tax. Further, a unitary combined group must exclude the income and apportionment factors for foreign corporations that have at least 80% of property, payroll and sales outside the United States or otherwise includable foreign corporations with income that is subject to the provisions of a federal income tax treaty.

What if my corporation is not part of a unitary combined group?

You are still required to file with the state of Virginia and let them know you are not a unitary combined group. This must be completed by July 1, 2021 to avoid a $10,000 penalty.

How do you complete the report?

All corporations should receive a two-page correspondence from the State of Virginia providing a correspondence ID number. Once this is received the report can be completed online at https://www.business.tax.virginia.gov/unitary/#/ubg/reporting. If correspondence has not yet been received, the correspondence ID can be obtained by calling 804-367-8037 and selecting option #4.

If you have further questions or need assistance, please contact your KWC adviser.

KWC Names New Principals

We are pleased to announce the promotions of Irene Walsh and Ben Stokes to principal with the firm.

“Irene and Ben embody the core values of the firm, demonstrating integrity, responsiveness and superior performance in all dealings with clients, coworkers and the community,” said Connie Hammell, Managing Principal of KWC. “It is my pleasure to introduce both as principals as we continue to grow as a top tier firm in the region.”

Irene Walsh is a new principal in KWC’s Family Wealth Services Group. She specializes in tax planning and compliance, for a wide range of clients, with a focus on high net worth individuals and their related fiduciary, gift, and estate matters. Irene works closely with investment advisors and attorneys to maximize client tax planning opportunities. Many of Irene’s clients have international tax exposure, and she works closely with their advisors and attorneys to meet their planning and compliance needs.

A graduate of Georgetown University, Irene has received numerous professional and personal awards and recognitions including CPA Practice Advisor’s 40 Under 40, and the Leadership Center for Excellence’s 40 Under 40. She has also served as a board member for the Northern Chapter of the Virginia Society of CPAs.

Outside of KWC, Irene is active in the rowing community. She is an adaptive rowing coach with Medstar National Rehabilitation Hospital and the United States Air Force Wounded Warrior Program. She has coached at the World Championship level and represented the United States as the head rowing coach at the Invictus Games for the past three Games. She volunteers as the treasurer for Baltimore Adapted Recreation and Sports, and Alexandria Community Rowing.

Ben Stokes is a new principal in the firm’s Business Services Group. He provides consulting, tax planning, and compliance services for closely held businesses and their ownership groups.

Ben has extensive experience in serving real estate-related industries including construction companies, real estate management groups, architectural services firms, and real estate brokerage firms.

Ben is a participant in an emerging leaders program consisting of future leaders from regional firms across the Southeast.

A graduate of the University of Mary Washington, Ben was born and raised in Northern Virginia. He is an avid fan of the Washington Nationals and DC sports. In his free time Ben can be found on the basketball court or reading up on current affairs.

KWC’s Managing Principal Named to the Chamber ALX’s 40 Under 40 Honorees

KWC is proud to announce that Connie Hammell, the firm’s Managing Principal, has been named among the Chamber ALX’s 2021 40 Under 40 Honorees. Each honoree was selected for their professional accomplishments, scholastic achievement, and community impact.

The 40 Under 40 program was established in 2016 to recognize those age 40 and under engaged in a variety of fields including business, technology, nonprofit management, civic life, public service, education, and the arts, who are shaping Alexandria for the future.

In addition to the 40 professionals selected for this year’s list, the Chamber has also chosen two area high school students to receive their first ever Youth Honoree awards, based on nominations received.

The Chamber will present the awards at an upcoming virtual event, presented by Beyer Subaru, on July 15. Visit the Chamber’s event page at https://thechamberalx.com/event/40-40 to learn more and purchase tickets. A portion of tickets will benefit the Scholarship Fund of Alexandria.

The full list of the 2021 40 Under 40 Honorees is below.


Amanda Alderson
National Industries for the Blind

Morgan Babcock
The Carlyle Council

Rachel Baer, Esq.
Family First Law Group

Jackie Barbarito
Goodwin House

Miguel Blancas
City of Alexandria

Taryn Brice-Rowland
National Association of Truck Stop Operators (NATSO Inc)

Alycia Burant
Healthy Minds Therapy

Christina Calloway
United States Patent and Trademark Office

Cynthia Chin
United States Patent and Trademark Office

C.J. Cross
Hops N Shine

Lieutenant Marcus Downey

Alexandria Police Department

Cheyanne Dwyer

Building Momentum

Paula J. Eichenbrenner, MBA, CAE

Academy of Managed Care Pharmacy Foundation

Kelly Ferenc
Bishop Boutique

Claudia Girerd
Freeman Decorating Company

Alyson Glick
Aptive Resources

Kellie Gunderman
The Social Edge, LLC & VIP Alexandria Magazine

Connie Hammell
KWC Certified Public Accountants

Amanda Parker Hazelwood
The Spitfire Club

Jenna Hong, MD
INOVA Medical Group

Mary Charlotte Horner
Legal Services of Northern Virginia

Michelle Smith Howard
Smart Beginnings Alexandria

Lorraine Johnson

Alexandria City High School Student

Nicole Jones
Stomping Ground, Bagel Uprising & Mae’s Market & Café

Harrison C. Lee
Cotton and Company

Lizzie Liu
The Campagna Center

Sarah Locke
Old Town Tax Consultants

Drew Marks
Mark-Woods Construction Services

Jennifer N. Masi
Children’s Law Center

Cody Mello-Klein
Alexandria Times

Morgan C. Middleton

United States Senate Federal Credit Union

Ashley Sanchez-Viafara
Alexandria City High School Student

Oliver N. Schipper, MD
Anderson Orthopaedic Clinic

Robin Shultz
INOVA Health System

Faith Spillman
Alexandria Police Department

Jacobson Truex
McLaughlin Ryder Investments

Jaqueline Tucker, Esq.
City of Alexandria

Lauren H. Waldron
Society for Marketing Professional Services (SMPS)

Natasha Walters
Brandywine Living at Alexandria

Toriseju Whyte, MD
Kaiser Permanente Mid Atlantic Medical Group

Jordan Wilhelm
The Critical Mass LLC

Andrew Young
Renner and Company, CPA, PC

 

 

EIC: New Law Makes Major Changes

The earned income credit (EIC) has been around for years. But it’s never been worth as much as it will be for 2021 under the new American Rescue Plan Act (ARPA). Some favorable changes are only for the 2021 tax year; others are permanent. Here are the details. (more…)

Temporary Changes to the Child and Dependent Care Credit

The American Rescue Plan Act (ARPA) includes major, but temporary, changes to the longstanding federal income tax child and dependent care credit. The changes are favorable for most taxpayers, except high-income individuals. Here’s what you need to know about this credit and how it’s changing for 2021. (more…)

Businesses and Individuals Benefit from American Rescue Plan Act

Yesterday, President Biden signed into law the American Rescue Plan Act (the “Act”). The Act provides approximately $1.9 trillion in further stimulus to individuals and businesses as well as state and local governments. Selected highlights of the new law are summarized below.

For businesses, the benefits include:

  • Employee Retention Credit (ERC): The ERC was extended through December 2021. The credit percentage (70 percent) and the qualifying wage maximum ($10,000 per employee per quarter) remain the same, however by extending the program through the end of the year the maximum credit per employee for 2021 is now $28,000 ($7,000 per quarter per employee).
  • FFCRA Paid Sick and Family Leave Tax Credit: For those employers who offer paid sick and family leave, the FFCRA credit is extended through September 30, 2021 and available up to a maximum of $12,000.
  • Additional Small Business Loan and Grant Funding: The Act extended and created the following:
    • $7 billion in additional loan funds available under the Paycheck Protect Program (PPP).
    • $15 billion in funding under Economic Injury Disaster Loan (EIDL) advance payments of $10,000 for businesses located in low-income communities that have no more than 300 employees and that have suffered an economic loss of more than 30%.
    • $25 billion in grants for restaurants and bars in amounts equal to the pandemic-related revenue loss for the eligible entity, up to $10 million per entity or $5 million per location.

For individuals, the benefits include:

  • Recovery Rebates: The Act authorizes the Internal Revenue Service (IRS) to pay $1,400 to individuals and an additional $1,400 for each dependent of the taxpayer up to specified income limits with phase outs.
  • Federal Unemployment Supplement: The Act extended the federal supplement to unemployment of $300/week through September 6th, 2021.
  • Child Tax Credit: The child tax credit was temporarily increased to $3,000 per child and $3,600 for children under age 6.

Does Your Business Qualify for the 2021 Employee Retention Credit (ERC)?

In order to qualify for the 2021 Employee Retention Credit your business must meet one of the following criteria:

• Have your operations been fully or partially suspended during a calendar quarter in 2020 due to an order from a governmental authority limiting commerce, travel, or group meetings due to COVID-19; 

or

• Did your business experience a significant decline in gross receipts during a calendar quarter? For 2021 you must have experienced a 20% decline in any one 2021 quarter when compared to the same quarter in 2019.

If the answers to these questions are no then your business does not qualify for the 2021 Employee Retention Credit.

If my business does qualify what are the benefits?

You will qualify for a payroll tax credit based on a calculation using qualified wages paid from 1/1/2021 – 6/30/2021. The per employee qualified wage limit for the credit calculation is $10,000 per quarter (including certain health care costs) and the credit amount is 70% with a max of $7,000 per quarter (up to $14,000 through 6/31/2021). 500 FTEs (full time equivalencies) is the threshold for determining which wages count towards the credit. Employers with more than 500 FTEs may not be eligible. Also, there is no double dipping permitted if a business also received funds under Payroll Protection Program round 2 (PPP2). Only wages that were NOT covered by a forgiven PPP loan or another tax credit program are eligible.