Jones & Roth CPAs & Business Advisors

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  • Largest Revenue Surplus in Oregon’s History Will Result in Kicker Credit on 2023 Returns

    Largest Revenue Surplus in Oregon’s History Will Result in Kicker Credit on 2023 Returns

    The Oregon Office of Economic Analysis (OEA) has confirmed a more than $5.61 billion revenue surplus in the 2021-2023 biennium, triggering a tax surplus credit, or “kicker,” for the 2023 tax year.

    The surplus—the largest in state history—will be returned to taxpayers through a credit on their 2023 state personal income tax returns filed in 2024. The credit is based on tax liability for the 2022 tax year. Taxpayers who have not yet filed a 2022 tax return, should file now so they can claim their kicker credit when they file their 2023 tax return.

    Calculating the Amount of Your Credit

    To calculate the amount of their credit, taxpayers can multiply their 2022 tax liability before any credits—line 22 on the 2022 Form OR-40—by 44.28 percent. This percentage is determined and certified by OEA. Taxpayers who claimed a credit for tax paid to another state would need to subtract the credit amount from their liability before calculating the credit.

    Personal income taxpayers can also determine the amount of their kicker using a What’s My Kicker? Calculator available on Revenue Online. To use the calculator, taxpayers will need to enter their name, Social Security Number, and filing status for 2022 and 2023.

    Who Is Eligible to Claim the Kicker?

    Taxpayers are eligible to claim the kicker if they filed a 2022 tax return and had tax due before credits. Even taxpayers who don’t have a filing obligation for 2023, still must file a 2023 tax return to claim their credit. The 2023 Oregon personal income tax return instructions will include detailed information on how to claim the credit on Form OR-40 for full-year Oregon residents, Form OR-40-P for part-year residents, and Form OR-40-N for nonresidents. Composite and fiduciary-income tax return filers are also eligible.

    Additional Information

    Taxpayers should keep in mind that the state may use all or part of their kicker to pay any state debt they owe, such as tax due for other years, child support, court fines, or school loans.

    Taxpayers can donate their kicker with a checkbox on their tax return to the Oregon State School Fund for K-12 public education, but they must donate the entire amount. The donation is permanent and cannot be taken back.

    Taxpayers also have the option of donating part or all of their refund to any or all of the 29 charities approved by the Charitable Checkoff Commission. Taxpayers use Form OR-DONATE to designate any amount or all of their refund to donate to charity.

    For more information, go to the Oregon surplus “kicker” credit page of the Department of Revenue website.

  • Webinar: Employment Law Updates for 2023

    Webinar: Employment Law Updates for 2023

    Jones & Roth Healthcare Advisors gave an online presentation about updates to employment laws and issues that matter most to healthcare clinics. Attorney Jaclyn K. Rudebeck shared the latest state and federal updates in employment law legislation, including:

    • Oregon Paid Family and Medical Leave (PFMLI)
    • Employment Liability Insurance Coverage (EPLI)
    • NLRB and how it applies to employers even when the workforce is not currently unionized
    • Other recent state and federal employment law updates

    Watch the replay:

    About the Presenter

    Jaclyn K. Rudebeck, Attorney, Watkinson Laird Rubenstein
    Jaclyn is an experienced employment and business attorney. In addition to her experience as outside counsel, she has held internal executive roles in the nonprofit sector and in the food and beverage manufacturing and hospitality industry, and she can relate to the many demands her clients face. Jaclyn also has advanced training in change management, continuous improvement/LEAN, and organizational wellness; her vast practical experience in these areas allows her to offer support beyond legal compliance, to help organizations truly thrive.

  • Oregonian Names Jones & Roth a Winner of The Oregon And Southwestern Washington Top Workplaces 2023 Award

    Oregonian Names Jones & Roth a Winner of The Oregon And Southwestern Washington Top Workplaces 2023 Award

    Eugene, Oregon (September, 2023) — For the sixth consecutive year, Jones & Roth has been awarded a Top Workplaces 2023 honor by Oregonian Top Workplaces. The list is based solely on employee feedback gathered through a third-party survey administered by employee engagement technology partner Energage LLC. The confidential survey uniquely measures 15 culture drivers that are critical to the success of any organization: including alignment, execution, and connection, just to name a few.

    “We are thrilled to receive the Top Workplaces award again this year,” said Tricia Duncan, CPA, Partner & Director of Operations at Jones & Roth. “This award is especially meaningful because it’s based on feedback from our people and celebrates a people-first approach to workplace culture.”

    “Earning a Top Workplaces award is a badge of honor for companies, especially because it comes authentically from their employees,” said Eric Rubino, Energage CEO. “That’s something to be proud of. In today’s market, leaders must ensure they’re allowing employees to have a voice and be heard. That’s paramount. Top Workplaces do this, and it pays dividends.”

    About Jones & Roth

    Jones & Roth CPAs and Business Advisors is one of the largest CPA firms headquartered in Oregon. The firm serves clients from offices in Hillsboro, Eugene, and Bend. Jones & Roth professionals are devoted to specialized practices and industries. The firm provides tax, audit, assurance, consulting, estate & trust, retirement plan services, and financial advisory service to businesses, nonprofit organizations, and private clients. Jones & Roth has developed teams that provide consulting and advisory services to niche industries including dental & medical clinics, privately held companies, family business, construction & real estate, nonprofit, and affordable housing.

  • An insurance policy glossary for construction business owners

    An insurance policy glossary for construction business owners

    Every type of business needs at least a few insurance policies. Construction companies, however, tend to need many of them. After all, there are so many risks to guard against.

    Precisely which types of coverage your company needs will depend on factors such as its size, structure and specialty, as well as the geographic area in which you operate. To help you assess what you have and what you might need, here’s a brief glossary of key policy types for contractors:

    Bonding. Some project owners require construction businesses to procure various types of bonds from a surety as insurance against incomplete or faulty services. Being bonded means the surety is assuring the owner that your business is qualified and financially stable enough to perform the work.

    Builder’s risk. This coverage provides financial protection against damage done to a structure still under construction — including costs resulting from fire, vandalism, weather and on-site tool or equipment theft.

    Commercial auto. Commercial vehicles require separate insurance coverage because they’re exposed to more risk than personal vehicles. This coverage provides both liability and physical damage protection for fleet vehicles including cars, trucks and vans. Some policies cover legal fees and the medical costs of others if an employee is at fault in an accident.

    Commercial property. This type of policy safeguards your construction company’s physical property — including tools, computers, signage and furniture — in the event of fire, broken pipes, bad weather, theft or vandalism. If you don’t need property insurance but want your equipment protected, a contractor’s tools and equipment (sometimes called inland marine) policy may be suitable.

    Cyberinsurance. Online attacks, such as ransomware, are a growing threat to construction businesses. At minimum, this type of policy covers liability for a data breach involving sensitive customer information — credit card numbers, driver’s license numbers and so forth — that results in fraud or might reasonably be expected to cause it.

    General liability. Often called commercial general liability, this policy type covers damages and legal costs associated with third-party injuries (not to employees) and property damage claims caused by your company or a faulty product you installed. It won’t pay to repair faulty work but can cover the resulting damage.

    Professional liability. This is also called an errors and omissions policy. It covers legal costs when a contractor is sued over a mistake, such as using the wrong materials.

    Umbrella. This type of policy provides supplementary coverage that absorbs costs exceeding the liability limits of another policy. Say you take on a project for which you’re contracted to carry $3 million of general liability insurance, but your insurance provides only $1 million of coverage. You could buy umbrella coverage for the remaining $2 million. Doing so may cost less than increasing the limit of your primary policy.

    Workers’ compensation. A strong workers’ comp policy is essential, and often mandatory, for any business with employees. But it’s especially important for construction companies because workers face high injury risk. Coverage provides wage compensation and assistance with medical bills for on-the-job injuries or illnesses while protecting the employer from related lawsuits.

    Your construction company’s insurance needs can change as your business grows or you move into other specialty areas. Work with an agent who understands the nuances of the industry and can help you identify must-have coverage. We can help you evaluate the costs.

  • IRS immediately halts the processing of new ERC claims

    IRS immediately halts the processing of new ERC claims

    The IRS announced on September 14, 2023 that it would immediately halt the processing of new Employee Retention Credit claims to add more safeguards to protect businesses from scams and prevent future abuse. The moratorium will run through at least December 31, 2023. 

    For claims filed prior to the moratorium, payouts will continue, but at a slower pace due to the detailed compliance reviews. With the stricter compliance reviews in place during this period, existing ERC claims will go from a standard processing goal of 90 days to 180 days — and much longer if the claim faces further review or audit. The IRS may also seek additional documentation from the taxpayer to ensure it is a legitimate claim.

    As of July 2023, there were 252 criminal investigations involving over $2.8 billion of potentially fraudulent Employee Retention Credit claims.

    Commissioner of the IRS, Danny Werfel said, “For those people being pressured by promoters to apply for the [ERC], I urge them to immediately pause and review their situation while we look to add new protections and safeguards to stop bad claims from ever coming in. In the meantime, businesses should seek out a trusted tax professional who actually understands the complex ERC rules, not a promoter or marketer hustling to get a hefty contingency fee.”

    Read the full article from the IRS

  • Inflation & The Real Rate of Return

    Inflation & The Real Rate of Return

    The real rate of return is an important personal finance concept to understand.

    It’s the rate of return on your investments after inflation. The real rate of return indicates whether you are gaining or losing purchasing power with your money.

    So if inflation checks in at a rate of 6%, does that mean any investment with less than a 6% rate of return is losing purchasing power?

    That’s where it gets a little complicated.

    In theory, any investment with less than a 6% rate of return may lose purchasing power. But there are other factors you want to consider as well. For example, are inflation rates likely to continue their current trend, or are they transitory effects of broader market changes?

    In the end, the real rate of return is only one factor to consider when building a portfolio. Your time horizon, risk tolerance, and goals are the primary drivers.

    A financial professional can help you better understand market conditions and build an investment strategy that manages the potential loss of the purchasing power of your money.

    The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

  • IRS issues guidance on new retirement catch-up contribution rules

    IRS issues guidance on new retirement catch-up contribution rules

    In December 2022, President Biden signed the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act. Among other things, the sweeping new law made some significant changes to so-called catch-up contributions, with implications for both employers and employees.

    With the new catch-up provisions scheduled to kick in after 2023, many retirement plan sponsors have been struggling to institute the necessary processes and procedures to comply. In recognition of taxpayer concerns, the IRS recently provided some relief in Notice 2023-62. In addition to extending the deadline, the new guidance corrects a technical error in SECURE 2.0 that had left taxpayers and their advisors confused about the continued availability of catch-up contributions for employees.

    The new requirements

    Tax law allows taxpayers age 50 or older to make catch-up contributions to their 401(k) plans and similar retirement accounts. The permissible amount is adjusted annually for inflation. For 2023, you can contribute an additional $7,500 over the current $22,500 annual 401(k) contribution limit. The contributions are allowed regardless of a taxpayer’s income level.

    Under the existing rules, all eligible taxpayers can choose whether to make their contributions on a pre-tax basis or a Roth after-tax basis (assuming the employer allows the Roth option). Section 603 of SECURE 2.0, however, mandates that any catch-up contributions made by higher-income participants in 401(k), 403(b) or 457(b) retirement plans must be designated as after-tax Roth contributions.

    Higher-income participants are those whose prior-year Social Security wages exceeded $145,000 (the threshold will be adjusted for inflation going forward). In addition, a plan that allows higher-income participants to make such catch-up contributions also must allow other participants age 50 or older to make their catch-up contributions on an after-tax Roth basis. The law provides that these requirements are effective for tax years beginning after December 31, 2023.

    The imminent effective date had plan sponsors and payroll providers worried, due to multiple administrative hurdles. For example, sponsors must develop processes to identify higher-income plan participants — they generally haven’t had the need to calculate employees’ Social Security wages previously — and provide that information to their plan administrators. Sponsors also must institute procedures to restrict catch-up contributions to Roth contributions and communicate the changes to their employees.

    The challenges are even greater for employers that don’t already have Roth contribution features in their traditional retirement plans. They have to choose between amending their plans to allow such contributions, which can take months to process and implement, or eliminating the ability to make catch-up contributions for all employees.

    The IRS guidance

    In Notice 2023-62, the IRS acknowledges the concerns related to the original effective date for the new requirements. In response, it has created an “administrative transition period,” extending the effective date to January 1, 2026. In other words, employers can allow catch-up contributions that aren’t designated as Roth contributions after December 31, 2023, and until January 1, 2026, without violating SECURE 2.0. And plans without Roth features may allow catch-up contributions during this period.

    The guidance also addresses a drafting error in SECURE 2.0 that led to some questions about whether the law eliminated the ability of taxpayers to make catch-up contributions after 2023. The IRS made clear that plan participants age 50 or older can continue to make catch-up contributions in 2024 and beyond.

    After-tax vs. pre-tax

    Unlike pre-tax contributions, after-tax contributions don’t reduce your current-year taxable income, but they grow tax-free. This is a significant advantage if you expect to be subject to a higher income tax rate in retirement than you are at the time of your contributions.

    You generally can withdraw “qualified distributions” without paying tax as long as you’ve held the account for at least five years. Qualified distributions are those made:

    • On account of disability,
    • On or after death, or
    • After you reach age 59½.

    You may be able to reap other savings from after-tax contributions, as well. For example, lower taxable income in retirement can reduce the amount you must pay for Medicare premiums and the tax rate on your Social Security benefits.

    But you could have reasons to reduce your current taxable income with pre-tax contributions. For example, doing so could increase the amount of your Child Tax Credit, which phases out at certain income thresholds, as well as the amount of financial aid your children can obtain for higher education.

    Note: Roth 401(k) contributions are currently subject to annual required minimum distributions (RMDs), like traditional 401(k)s. Beginning in 2024, though, designated Roth 401(k) contributions won’t be subject to RMDs until the death of the owner.

    Potential future guidance

    The IRS also used Notice 2023-62 to preview some additional guidance regarding Section 603 that’s “under consideration.” After taking into account any comments received, the IRS stated it is considering releasing future guidance concerning multi-employer plans and other out-of-the-ordinary situations.

    Don’t delay

    The IRS’s extension of the effective date for the Section 603 requirements is good news for employers and employees alike. As noted, though, the requisite changes to achieve compliance will take some time and effort to put into place. Plan sponsors would be wise to start sooner rather than later.

  • Paid Leave Oregon Assistance Grants Now Available to Small Businesses

    Paid Leave Oregon Assistance Grants Now Available to Small Businesses

    The State of Oregon Employment Department has announced that Assistance Grants are now available to small employers (fewer than 25 employees) who choose to pay into the Paid Leave Oregon program. These grants offer financial help to hire a temporary replacement employee or to help with significant wage‑related costs — like overtime or training — while a permanent employee is on leave. Small businesses may qualify for a grant up to 10 times per year. If approved, small businesses will need to pay the employer contribution for two years after Paid Leave Oregon awards the grant.

    To learn about assistance grants, how to apply, what assistance grants may be used for, repayment information, and more, visit Paid Leave Oregon.

  • Five Most Overlooked Tax Deductions

    Five Most Overlooked Tax Deductions

    Who among us wants to pay the IRS more taxes than we have to?

    While few may raise their hands, Americans regularly overpay because they fail to take tax deductions for which they are eligible. Let’s take a quick look at the five most overlooked opportunities to manage your tax bill.

    1. Reinvested Dividends: When your mutual fund pays you a dividend or capital gains distribution, that income is a taxable event (unless the fund is held in a tax-deferred account, like an IRA). If you’re like most fund owners, you reinvest these payments in additional shares of the fund. The tax trap lurks when you sell your mutual fund. If you fail to add the reinvested amounts back into the investment’s cost basis, it can result in double taxation of those dividends.1

      Mutual funds are sold only by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.

    2. Out-of-Pocket Charity: It’s not just cash donations that are deductible. If you donate goods or use your personal car for charitable work, these are potential tax deductions. Just be sure to get a receipt for any amount over $250.2
    3. State Taxes: Did you owe state taxes when you filed your previous year’s tax returns? If you did, don’t forget to include this payment as a tax deduction on your current year’s tax return. There is currently a $10,000 cap on the state and local tax deduction.3
    4. Medicare Premiums: If you are self-employed (and not covered by an employer plan or your spouse’s plan), you may be eligible to deduct premiums paid for Medicare Parts B and D, Medigap insurance, and Medicare Advantage Plan. This deduction is available regardless of whether you itemize deductions or not.4
    5. Income in Respect of a Decedent: If you’ve inherited an IRA or pension, you may be able to deduct any estate tax paid by the IRA owner from the taxes due on the withdrawals you take from the inherited account.5

    Disclosures & Citations:

    1. TheBalance.com, 2021
    2. IRS.gov, 2022
    3. IRS. gov, 2022
    4. IRS. gov, 2022
    5. IRS.gov, 2022. In most circumstances, once you reach age 72, you must begin taking required minimum distributions from a Traditional Individual Retirement Account (IRA). Withdrawals from Traditional IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. You may continue to contribute to a Traditional IRA past age 70½ as long as you meet the earned-income requirement.

    The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

  • Check your construction company’s vital signs with KPIs

    Check your construction company’s vital signs with KPIs

    When you go to the doctor, the first thing the medical staff likely does is check vital signs such as your temperature and blood pressure. They do so because, if any of these measurements are outside the norms, the doctor may need to elevate your level of care.

    Similarly, as a construction company owner, you should regularly check key performance indicators (KPIs) of your business. That way, you can monitor its financial health and equipment maintenance — and determine whether you need to address any pressing issues more urgently.

    Calculate and benchmark

    Certain ratios, which are typically calculated using your financial statements, can serve as particularly valuable KPIs. They enable you to gauge how your company is doing, compare its current position to past results and even see how you’re measuring up against other similar construction businesses.

    Indeed, industry “benchmarking” can provide an early warning of financial risks. Data is available from a variety of sources, including the Construction Financial Management Association (CFMA).

    The CFMA’s 2022 Construction Financial Benchmarker report (as of this writing, the most recent one available) provides a variety of financial ratios and other KPIs, broken down by company size (based on revenue volume) and industry sector. The right measures for your company will depend on factors such as its size and specialty, but here are a few examples:

    Current ratio (current assets ÷ current liabilities). A valuable KPI for construction businesses, current ratio measures liquidity — that is, the ability to satisfy short-term liabilities with cash and other liquid assets. In the CFMA’s report, the average current ratio was 1.8 overall and 2.6 for smaller businesses (those with less than $10 million in revenue).

    Months in backlog (backlog ÷ [revenue ÷ 12]). This indicates the number of months it’ll take to complete all signed or committed work. A lower ratio may signal that the company needs new contracts to maintain consistent revenue. In the CFMA’s report, the average was 9.2 overall and 7.1 for smaller construction companies.

    Debt to equity (total debt ÷ net worth). This measures your construction business’s use of leverage. A high ratio enables you to earn more on invested equity but also heightens your exposure to risk. In the CFMA’s report, the average ratio was 1.2 overall and 0.7 for smaller companies.

    Working capital turnover (revenue ÷ working capital). This ratio indicates the amount of revenue generated by each dollar of working capital. As a rule, a higher number is better — though an extremely high ratio could raise a red flag that your working capital is stretched too thin. In the CFMA’s report, average working capital turnover was 6.6 overall and 4.3 for smaller construction businesses.

    Monitor equipment, too

    Some contractors wait until equipment breaks down before servicing it. Monitoring the right KPIs and using data analytics can allow you to anticipate when maintenance or replacement parts will be needed, minimizing downtime and lost productivity.

    How do you get the data? Sensors embedded in many types of equipment can collect real-time data such as fuel usage, mileage, hours of operation, engine temperature and fluid levels. Tracking and acting on these data points allows you to perform “predictive maintenance” rather than be forced into crisis mode when a breakdown occurs.

    Get regular checkups

    Even a healthy construction business can benefit from regular KPI-based checkups. In fact, most financially sound companies get and stay that way by keeping up with the numbers. We’d be happy to help you choose, calculate and track the optimal metrics for your business.