Member of Russell Bedford International, a global network of independent professional service firms.
Member of Russell Bedford International, a global network of independent professional service firms.
Today is International Women’s Day and we are so proud to recognize and celebrate the strong women of Cray Kaiser. These women continue to advocate for others and blaze a bold path forward for women’s equality in the world. We are especially proud to share that 50% of the Cray Kaiser team is made up of women, with the firm being 66% women-owned.
We recognize the unique value that women bring to the workplace and we will continue to take action to drive out gender disparity until we can all embrace equity.From all of us at Cray Kaiser, Happy International Women’s Day!
Although you can’t avoid taxes, you can take steps to minimize them. This requires proactive tax planning – estimating your tax liability, looking for ways to reduce it and taking timely action. To help you identify strategies that might work for you, we’re pleased to present the 2022 – 2023 Tax Planning Guide.
In Cray Kaiser’s Employee Spotlight series, we highlight a member of the CK team. We couldn’t be prouder of the team we’ve grown and we’re excited for you to get to know them. This month we’re shining our spotlight on Eric T. Challenger.
As Cray Kaiser’s tax manager, Eric leads the client relationship and deliverables for many of CK’s business and individual clients. This includes tax compliance and planning, along with general business guidance for clients. His primary focus is on businesses and their owners. Eric assists them from the startup stage with entity selection and implementing accounting structure to the end of the life cycle and transitioning transactions while keeping in mind the individual needs of each owner on a personal level and helping them reach their personal goals. Eric is also the tax lead on CK’s nonprofit side where he helps register and maintain tax-exempt status for all nonprofit clients.
From a firm perspective, Eric implements much of the training for the staff at CK and is considered one of the go-to resources within the firm for all staff, from admin to partners. He leads by providing education to sharpen staff knowledge and skills, empowering them to tackle CK clients’ needs.
Eric is a DePaul graduate and previously worked for a few other small firms before he joined the team at CK. When asked about an impactful moment in his career, he responded, “Passing the CPA exam!”
Eric began at CK in 2012 and was instantly drawn to the small firm feel and family culture. He enjoys the opportunity to work with different clients, and on projects and situations which keep things interesting, challenging and rewarding.
When asked which of CK’s core values mean the most to him and why, Eric answered, “Education – I probably would have been a teacher if I wasn’t an accountant. I enjoy learning something new every day, whether in accounting or on a personal level. I am always trying to be a better person and accountant. There is nothing more rewarding than passing on knowledge and watching lightbulbs go on in others.”
When looking towards the future, Eric is most excited about establishing more clients and being a part of their trusted team of advisors. “I want to be the first line of attack for clients trying to make impactful decisions, whether business or personal,” said Eric. “My goal? To be invited to every client retirement party and know I played a substantial role in getting them to that finish line.”
Our 50th-anniversary event. Sharing stories with clients and employees who have been integral to the growth of CK.
Spending time with family and friends and hopefully getting some golf in.
Undersell and overperform. Spend less than what you make. Never judge a book by its cover.
I’m engaged to my fiancé Stacey and we have a one-year-old golden retriever named Leeloo.
I tried learning the guitar, but only achieved mediocre abilities. However, it has translated into first class air-guitar skills!
The first time I went on an all-inclusive vacation to Cancun, Mexico with Stacey. I didn’t have to lift a finger…I was just able to relax with her. It was wonderful!
Forest Gump and Game of Thrones
I listen to varying types of music. Depending on my mood or projects I can listen to Dua Lipa, Weezer, Carole King, or John Mayer. But my all-time favorite is Metallica…I was an angry teenager!
The Speed of Trust by Stephen M.R. Covey.
Staying abreast of state nexus requirements is a tricky task. Gone are the days when physical presence in a state was required for nexus. In today’s economy, as interstate sales are a large portion of many companies’ revenues, states are increasingly determining nexus on connections other than physical presence. Even taxpayers who put forth all efforts to maintain state compliance sometimes realize they should have been filing income tax or collecting sales tax in a state where they haven’t been physically present.
When this happens, there is no need to panic. Equally so, ignoring the issue will not make the problem go away. Many states offer Voluntary Disclosure Agreement (VDA) programs that enable taxpayers to report previously undisclosed liabilities for taxes, such as income tax and sales tax. The benefits of working through a VDA include:
Taxpayers with undisclosed liabilities in multiple states may consider applying for multistate voluntary disclosure through the Multistate Tax Commission (MTC). The MTC facilitates the disclosure of tax liabilities for multiple states by working directly with each state’s VDA program.
Not every taxpayer qualifies for a VDA, and there are a few important limitations, such as the inability to amend returns or request refunds for tax periods within voluntary disclosure. Therefore, it is important to check with your tax professional before applying to a state program. Each VDA is unique and Cray Kaiser can help. Call us today if you have questions about how state nexus applies to your company or if you believe your company could benefit from a VDA.
*Exceptions include Iowa, with a typical look-back of five years, Nevada, with an eight-year look-back, and a Hawaii look-back period of 10 years.
The tax code has included energy credits for making your house more efficient for many years. Starting in 2006, taxpayers could claim credits for making energy-efficient home improvements. However, there was a lifetime cap of $500 and a small credit rate of 10% in any given year. As such, the energy savings improvements were not a primary focus for most taxpayers.
With the new Inflation Reduction Act that was passed this year, the credit has been enhanced. The lifetime cap limit of $500 and 10% eligibility has been removed. Going forward the annual cap is now $1,200 and the credit rate increased to 30%.
The legislation made the changes retroactive to include energy-saving home improvements for 2022 and extends the credit through 2032.
As with the prior law, certain credit limits apply to the various types of energy-saving improvements. Although not a complete list, the following are credit limits that apply to various energy-efficient improvements under the new law:
In addition to the items listed above, there’s a $150 credit for having a home energy audit performed. The audit must be conducted and prepared by a home energy auditor that meets the certification or other requirements specified by the IRS.
One thing to keep in mind is that after December 31, 2024, manufacturers are required to provide you with Identification Numbers. The Identification Numbers will be recorded in an IRS database and will notate if the improvement qualifies for the Home Energy Improvement credit.
With substantial increases in energy bills and the higher credits now available homeowners who make energy-efficient improvements may recoup those costs sooner. Please note that the credits do not carry forward, so if your tax circumstances do not allow full credit, it would be lost in future years.
If you have questions related to how you might benefit from the enhanced and extended tax credit for making energy-saving improvements to your home, please call the experts at Cray Kaiser today at 630-953-4900.
Interest in purchasing electric vehicles (EV) has increased over the years, as have the tax incentives that come with ownership. As more manufacturers push EVs to be a larger part of their sales, consumers have been able to benefit from tax incentives for purchasing these vehicles. Historically, EV credits were based on the number of vehicles manufacturers produced, indirectly spurring manufacturers to switch to the new technology. However, with the most recent legislation changes from the Inflation Reduction Act (IRA), the EV tax credit requirements have been modified, impacting if they can be claimed on your income tax return.
With the IRA, Congress wanted to ensure that the final assembly of vehicles qualifying for tax credits occurs in North America, thereby increasing domestic production over time. This is a big change from the prior legislation which has reduced the list of vehicles that qualify for the credit – for now. Over time, we anticipate the list will increase. In addition, and for the first time, used cars are also eligible, but for a lower credit amount. Use this link from the Department of Energy to view a list of vehicles that will qualify under the new act.
The other part of the IRA legislation includes price caps on vehicles, which means only vehicles with a purchase price below the limits will qualify for credit. The amount of the credit will be based on adjusted gross income. The purchase price limits are:
However, there are some wrinkles in the implementation of this new legislation based on timing. If you purchased the vehicle before the act was passed on August 16, 2022, but delivery happens after this date, then you will still fall under the old legislation. If you purchase and take possession between August 16, 2022 and December 31, 2022, then the credit is transitory, as it takes into effect both the old legislation (caps on number of vehicles sold by manufacturers) and new legislation (final assembly in North America). After January 1, 2023, the new legislation applies, which includes final assembly in North America, upper limits on vehicle cost, and the removal of manufacturer caps on vehicle production.
Let’s explore the new rules using the Tesla 3, one of the most popular electric vehicles on the market, as an example. Under current legislation, along with the transitory period up to December 31, 2022, the Tesla 3 would not qualify for any tax credits because Tesla produced and sold more than 200,000 vehicles. However, after January 1, 2023, the Tesla 3 would again qualify because the final assembly is in North America and the vehicle is typically under $55,000 (depending on the package you choose).
Qualifying for the EV tax credit can be complicated and nuanced, but CK can help make sense of these new changes. Make sure you contact us before purchasing an electric vehicle so we can confirm your eligibility for the tax credit. Call us today at 630-953-4900.
You may have heard that the Illinois House and Senate recently passed the Illinois Family Relief plan. Under the plan, one-time individual income and property tax rebates will be issued to taxpayers who meet certain requirements.
Rebates are expected to begin being issued the week of September 12. If you have not/are not receiving a refund or received a paper check refund, it may take longer for the rebate to be issued.
Keep reading to see if you are eligible to receive one or both of these rebates.
If you were an Illinois resident in 2021 and your adjusted gross income on your 2021 Form IL-1040 is under $400,000 (if filing jointly) or under $200,000 (if filing as a single person) you are eligible for a rebate.
If you filed as a single person your rebate is $50, married couples filing jointly will receive $100 ($50 per person). If you have dependents, you will receive a rebate of up to $300 — $100 per dependent, with a maximum of three.
If you have filed your 2021 IL-1040, you will automatically receive your rebate. If not, you have until October 17, 2022 to file your 2021 IL-1040. If you have dependents, you also must complete Schedule E/EIC.
You are eligible for a property tax rebate if you are an Illinois resident who paid Illinois property taxes in 2021 on your primary residence in 2020, and your adjusted gross income on your 2021 Form IL-1040 is $500,000 or less (if filing jointly) or $250,000 or less (if filing as a single person).
Your rebate amount is equal to the property tax credit you were qualified to claim on your 2021 IL-1040, up to a maximum of $300.
If you have filed your 2021 IL-1040 and Schedule ICR, you will automatically receive your rebate. If not, you have until October 17, 2022 to file a Property Tax Rebate form (IL-1040-PTR) to receive your rebate.
Submit Form IL-1040-PTR electronically through MyTax Illinois or submit a paper Form IL-1040-PTR.
Contact the tax experts at Cray Kaiser by calling 630.953.4900 or by filling out this form if you have any questions or need assistance with these rebates
In Cray Kaiser’s Employee Spotlight series, we highlight a member of the CK team. We couldn’t be prouder of the team we’ve grown and we’re excited for you to get to know them. This month we’re shining our spotlight on Noah Hogue.
As a staff accountant, Noah spends most of his time with the audit team completing corporate audits, reviews, compilations, and employee benefit plan (401k) audits. During the months of March and April, he lends his talents to business and individual tax prep, as well as continuing his monthly accounting responsibilities throughout the year.
Noah began his journey with CK as an intern during January of 2020 while he attended Aurora University. The internship gave him a glimpse into what a day is in the public accounting field and gave him the opportunity to get to know and learn from other interns in the program.
A huge motivator for Noah is expanding his knowledge in accounting. CK provides a variety of services that allows him to sharpen his skills in different areas and continue to learn. As someone new to the Chicagoland area, he also enjoys traveling to meet clients while exploring different areas of the city.
When asked which of CK’s core values mean the most to him and why, Noah answered, “Trust and education mean the most to me. We take pride and ownership in our work which leads to a reliable service for our clients. We build our confidence by educating ourselves and each other as teammates.” Noah believes there is always something to learn from or celebrate, no matter how big or small the engagement, which leads to many impactful moments.
When asked about his favorite CK outing, Noah remembers the group outing he attended at the Arlington Race Course. “Nothing gets me going like betting 50 cents on a horse with a ridiculous name,” said Noah.
Albert Einstein once said, “It’s not that he is so smart, it just that he stays with his problems longer.” I see that in a lot of successful people, they don’t give up.
I have a fun memory of having an awesome time touring Elvis Presley’s house in Graceland as a kid during a family road trip. I enjoy touring historical sites and feeling what it was like to live in a different time.
My all-time favorite show is Seinfeld for all the random situations the group finds themselves in. Currently, I’m really into Stranger Things.
ABC- Anything but country.
Tax law requires individuals who have reached age 72 to begin taking minimum distributions from their traditional IRA accounts. These are referred to as a required minimum distribution or RMD. The RMD amount is calculated by dividing the value of the IRA account on December 31 of the prior year by the distribution period from the Uniform Lifetime Table, corresponding to the taxpayer’s age. For example, if an individual turns 75 in 2022, the distribution period from the table is 24.6. If the balance in their IRA was $500,000 on December 31, 2021, then the individual’s RMD for the current year would be $20,325 ($500,000/24.6). RMDs are counted as taxable income. The IRS develops the Uniform Lifetime Table using mortality rate data; it has been updated effective with 2022 distributions.
The tax law also permits individuals aged 70½ or over to transfer funds from their IRA accounts to charities in what is referred to as Qualified Charitable Distributions (QCDs). These QCDs are not taxable. In instances where a taxpayer must make required minimum distributions (RMDs), the QCDs count toward the RMD requirement. Thus, in our prior example, if the individual had transferred the $20,325 to a qualified charity in a QCD, the $20,325 would not have been taxable.
However, QCDs are not limited to RMDs. For those with large IRA balances, QCDs can total up to $100,000 annually. Additionally, QCDs are not limited to a single transfer in a tax year as long as the total amount distributed does not exceed the $100,000 annual limit.
Example: Anne wants to contribute to her church’s building fund, the American Cancer Society, and the American Red Cross in the same year. She can do that by having her IRA make separate direct transfers to each charity.
It is important to remember that all individual Traditional IRAs are treated as one for purposes of determining an RMD and that all QCDs must be direct transfers by the IRA trustee to the charity.
Qualified Charitable Distributions can provide significant tax benefits. Here is how this provision, if utilized, plays out on a tax return:
At first glance, this may not appear to provide a tax benefit. However, by excluding the distribution, a taxpayer lowers his or her adjusted gross income (AGI), which helps for other tax breaks (or punishments) that are pegged at AGI levels, such as medical expenses if itemizing deductions, passive losses, taxable Social Security income, and so on. In addition, non-itemizers essentially receive the benefit of a charitable contribution to offset the IRA distribution.
At first glance, this may not appear to provide a tax benefit. However, by excluding the distribution, a taxpayer lowers his or her adjusted gross income (AGI), which helps for other tax breaks (or punishments) that are pegged at AGI levels, such as medical expenses if itemizing deductions, passive losses, taxable Social Security income, and so on. In addition, non-itemizers essentially receive the benefit of a charitable contribution to offset the IRA distribution.
In the past, the tax code did not permit contributions to IRAs by individuals once they reached age 70½, which coordinated with the previous age requirement to begin RMDs and the ability to make QCDs. The age restriction to contribute to IRAs has been eliminated, so now individuals may make IRA contributions at any age provided they have earned income.
Whether intentional or an oversight by Congress, the tax changes did not modify the age at which a taxpayer can begin making QCDs and left it at age 70½ – no longer in synchronization with the revised RMD age of 72.
Unfortunately, that has created a situation that can be detrimental for individuals who have earned income and wish to utilize the QCD provisions and continue to contribute to an IRA after age 70½. The problem is that a Qualified Charitable Distribution must be reduced by the sum of IRA deductions made after age 70½ even if they are not in the same year, causing unexpected tax results for taxpayers that are not aware of this complication. This is best demonstrated by a couple of examples.
Example #1 –
Jack makes a deductible IRA contribution of $7,000 when he is age 71 and another $7,000 contribution at the age of 72. He claims an IRA deduction of $7,000 on his tax return for each year. Then later when he is 74, he makes a QCD of $10,000 to his church’s building fund. Since Jack had made the IRA contributions after age 70½, his QCD must be reduced by the post-70½ contributions that were deducted, and as a result, the $10,000 is a taxable IRA distribution ($10,000 – 14,000 = <$4,000>). However, he can claim the $10,000 to the church building fund as a charitable contribution on Schedule A if he itemizes his deductions.
In the next year, Jack makes a $5,000 QCD to the university where he got his degree. The excludable amount of the QCD is $1,000 ($5,000 – $4,000 = $1,000). The $4,000 is the amount that remained from post-age 70½ IRA contributions that didn’t previously offset QCDs. Jack includes $4,000 as taxable IRA income and can deduct $4,000 as a charitable contribution if he itemizes. No amount of post-age 70½ IRA contributions remains to reduce the excludable amount of QCDs for subsequent taxable years.
Example #2 –
Bob makes a traditional IRA contribution of $7,000 at age 71 and another $7,000 contribution at the age of 72 and deducts the IRA contributions on his returns. Then later when he is 74, he makes a QCD in the amount of $20,000 to his church’s building fund. Since Bob had made the deductible IRA contributions after age 70½, his QCD must be reduced by $14,000. As a result, of the $20,000 QCD, $14,000 is a taxable distribution, $6,000 is nontaxable, and Bob can claim a $14,000 charitable contribution.
All of this can become quite complicated. If you are considering making a Qualified Charitable Distribution and made IRA contributions after age 70½ consider consulting with the tax experts at Cray Kaiser before you make the distribution to ensure you understand the potential tax ramifications.
At Cray Kaiser, we take as much pride in being “People People” as we do in being “Numbers People.” The reason is simple, the numbers matter because of the people whose businesses and lives they affect. Those people have spoken! We are pleased to say that CK ranks well above the industry average in customer satisfaction according to NPS results from our recent customer survey.
For those unfamiliar, NPS – Net Promoter Score – is a customer satisfaction benchmark that measures how likely your customers are to recommend your business to a friend or colleague on a scale from 1 to 10. Based on their answer individual respondents are categorized as “promoters” (answered with a 9 or 10), “passive” (answered with a 7 or 8), or “detractors” (answered with a six or lower).
An organization’s NPS score is calculated by subtracting the percentage of detractors, those who wouldn’t recommend you, from the percentage of promoters or customers who would recommend you. So, it goes without saying that you want your promoters to significantly outweigh your detractors.
A Net Promoter Score can range from -100 to 100. The creators of NPS consider a “good” NPS score to be zero and above. Above 50 is excellent and above 80 is world-class.
Because it measures overall sentiment using the same question and calculation; Net Promoter Scores can be used as a benchmark against competitors, other companies, or an industry segment.
With an NPS of 89, Cray Kaiser scores significantly higher than the accounting industry’s NPS of 44. And that’s not all! According to data from CustomerGauge CK’s world-class NPS is higher than many beloved consumer brands like Apple, Southwest Airlines, and Target to name a few.
Our world-class team of accounting and tax specialists is honored to be so well regarded by our clients and is just a phone call or email away.
