Page 69 - BusinessWest October 31, 2022

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19 SULLIVAN,POULIN&PAYNE,P.C.
66 Morgan Road, West Springfield, MA 01089 (413) 739-9685; www.sppcpa.com
23 TROMBLEYASSOCIATESBOOKKEEPINGANDPAYROLL 3
Accounting;businessplanning;bookkeepingservices;compilation;review-levelfinancialstatements;individual and business tax planning and return preparation
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95 Post Office Park, Suite 9506, Wilbraham, MA 01095 (413) 599-1613; www.trombleybp.com
Tuition
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Who Reports the Income?
When a distribution is made, form 1099-Q will be issued, with informa- tion regarding the gross distribution, earnings within the account, and the type of account it is (such as a state or private plan). The individual receiving the distribution will usually be the one reporting the income, with their name on the form.
Question 1
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“In addition to the taxes on income otherwise authorized under this article, there shall be an addi- tional tax of 4% on that portion of annual taxable income in excess of $1 million reported on any return related to those taxes.
“To ensure that this additional tax continues to apply only to the Commonwealth’s highest-income taxpayers, this $1 million income level shall be adjusted annually to reflect any increases in the cost of living by the same method used for federal income tax brackets. This paragraph shall apply to all tax years beginning on or after January 1, 2023.”
The Coalition to Stop the Tax Hike Amendment argues that Question 1 impacts the tens of thousands of small businesses across the state that file taxes
as pass-through entities, noting that these small businesses file their business’ revenue as personal income, even though much of it is reinvested back into their business. The coalition notes that many of these small businesses are operating on razor-thin margins and take home very little profit, yet the pro- posed amendment treats their business revenue as if they are a high-earning individual, threatening their business’ viability.
“Our organization represents 4,000 small busi- nesses across the state, with a vast majority of these businesses set up as pass-through entities,” said Jon
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Barbara Trombley
Bookkeeping and payroll for small businesses
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PASCUCCI, TEIXEIRA & CO., P.C.
78 Main St., Northampton, MA 01060 (413) 586-0990; www.ptcpapc.com
ON TIME ACCOUNTING
22 Southwick St; Feeding Hills, MA 01030 (413) 789-2443; www.otawesternma.com
COMPANY
ACCOUNTING AND TAX ASSOCIATES INC.
264 North Main St., Suite 3, East Longmeadow, MA 01028 355 Bridge St., Suite 5, Northampton, MA 01060
(413) 525-0862; www.accountingandtaxassociates.com
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NO. OF STAFF/ OFFICES
5 1
5
1 Stephen Payne
4 1
13 2
ACCOUNTING FIRMS
RANKED BY NUMBER OF CPAS IN WESTERN MASS.
MANAGING PARTNER(S)
Fernando Teixeira
Michael Margiotta
Doreen Rosenberg
PRIMARY SPECIALTIES
Tax planning and preparation; accounting and auditing; business valuations; business consultants
Bookkeeping, accounting, business development, strategic planning, consulting, forensic account, credit and collections consulting; industry specialties include construction, real estate, automotive, medical, advertising, transportation, and manufacturing
General accounting; tax planning and preparation for corporations, partnerships, estates, trusts, and individuals; payroll services
Can I Make a Gift Donation to a 529 Plan?
Yes. Keep in mind, however, that the gift amount is not exempt from the annual $15,000 gift-tax exclusion limit as established by the IRS. The IRS does, however, provide an option for taxpay- ers who gift up to $75,000 in a single year to split that gift in five equal parts over the next five years (as if it was actually split over those five consecu- tive years).
For example, if a taxpayer gifted $75,000 during the year, the gifting taxpayer can elect to report $15,000
($75,000 / 5) in year one, and $15,000 again in the next four subsequent years, thereby not exceeding the annu- al limit. This election can be made for each unique beneficiary plan.
Can I Roll Over the Account Amount to Another Plan?
Yes. Perhaps the beneficiary doesn’t plan to go to college or accrue these qualified higher-education expenses in the foreseeable future. Plan benefits may be transferred from one benefi- ciary to another in the same family
(although the IRS has a vast definition of what constitutes family) with no adverse tax consequences, with the one caveat being that you cannot roll over more than one QTP to a single benefi- ciary within a 12-month period.
Qualified tuition programs are an option to help fund educational goals and may be a helpful financial strategy when navigating those various costs associated. u
Charles Jacques, staff accountant at Melanson, specializes in commercial tax returns and planning.
BusinessWest
ACCOUNTING & TAX PLANNING
OCTOBER 31, 2022 69
NO. OF CPAS/ PARTNERS
Hurst, president of the Retailers Assoc. of Massachu- setts. “Many of these organizations could see their taxes nearly double under Question 1. This constitu- tional amendment will devastate our local economy and threaten small businesses statewide.”
The coalition also argues that Question 1 robs the nest eggs of small-business owners who are relying on the sale of their business to fund their retirement. Unlike federal taxes on personal income, this mea- sure treats one-time gains — such as those from sell- ing a business, home, or farm — as regular income, pushing many retirees into the new, higher tax brack- et, and nearly doubling their taxes.
Among the organizations that have united against the amendment are the Massachusetts High Tech Council, Associated Industries of Massachusetts,
the Western Massachusetts Economic Development Council, the National Federation of Independent Business, the Massachusetts Fiscal Alliance, the Mas- sachusetts Farm Bureau, the Massachusetts Retail Lumber Dealers Assoc., the Springfield Regional Chamber and many other chambers of commerce, the Alliance of Automotive Service Providers of Mas- sachusetts, the Massachusetts Seafood Collaborative, and the Massachusetts Business Roundtable.
But Question 1 does have supporters, as the Yes on Question 1 campaign has been endorsed by 87 labor unions; 72 community organizing groups; 18 faith-based groups; more than 75 businesses; 64 city
councils, select boards, and school committees; 89 local Democratic town and ward committees; and 115 other social-service and not-for-profit organiza- tions focused on housing, education, transportation, public health, and the environment.
Supporters call the amendment an opportunity for Massachusetts to improve schools and colleges, fix roads and bridges, create jobs, and boost the economy, all without 99% of taxpayers paying a single cent more.
As a tax on personal income over $1 million, Fair Share for Massachusetts argues, business taxes would not be affected, and Question 1 doesn’t apply to any business revenues. It notes that fewer than 3% of businesses owners in Massachusetts have taxable personal income over $1 million that would be sub- ject to Question 1, and many of them are primarily investors or shareholders, not people running a busi- ness day-to-day.
“If a business is generating more than a million dollars in personal profit for the owner, even after they deduct all their business expenses, let’s be real: it’s not a small business, and that super-rich business owner can afford to pay their fair share in taxes,” said Gerly Adrien, business director of Fair Share for Mas- sachusetts and owner of Tipping Cow Ice Cream in Somerville and Boston. u