Returning Value Blog

Charging Personnel Costs to Federal Awards

Salary costs represent the bulk of dollars from federal grants and often pose compliance risks and challenges to new and experienced recipients alike. One question we are often asked by clients is, "how can we maintain compliance with federal regulations regarding accurately supporting and recording personnel costs when not all of our employees complete and submit timesheets?"

In this article, we will discuss the federal requirements for charging personnel costs to awards, alternatives to timesheet processes, and common challenges and pitfalls to avoid when charging labor costs to federal grants.

When asked what is at the top of their finance department’s “to-do” list, many nonprofits name the need for an updated cost allocation plan. An effective cost allocation strategy is essential to organizations’ understanding of how their resources are being deployed. It is also integral to performing cost analyses, such as evaluating funding requirements and comparing actual versus budgeted costs.

Homes are one of the greatest and most expensive assets many people have. As a parent, you want your children to have your home after you die, but to ensure that your children are left with your home, there are some important steps that you must take.

Tax Strategist Insight

For individuals seeking to minimize taxes while also transferring wealth to the next generation, the income tax benefits provided under Internal Revenue Code Section 1202 can match up well with estate planning efforts. Section 1202 permits a taxpayer other than a corporation to exclude from taxable income a specified percentage of gain – and potentially the entire gain – from the sale or exchange of “qualified small business stock” (QSBS) held for more than five years. In addition, with proper planning, each recipient of a gift of QSBS is also eligible for the gain exclusion.

Whether you’re operating a new company or an established business, losses can happen. The federal tax code may help soften the blow by allowing businesses to apply losses to offset taxable income in future years, subject to certain limitations.

If you’re the owner of an incorporated business, you know there’s a tax advantage to taking money out of a C corporation as compensation rather than as dividends. The reason: A corporation can deduct the salaries and bonuses that it pays executives, but not dividend payments. Therefore, if funds are paid as dividends, they’re taxed twice, once to the corporation and once to the recipient. Money paid out as compensation is only taxed once — to the employee who receives it.

It may seem that there will always be time to address estate planning. However, a unique opportunity to maximize the amount of wealth that can be tax-efficiently passed to heirs will expire at the end of 2025. Furthermore, legislation could curb lifetime exemption limits even sooner. The opportunity is even more pressing because the current market downturn represents an especially advantageous time to optimize your taxable estate before markets eventually recover.

The Executive Office of the President, Office of Management and Budget, announced on January 30, 2023, that the COVID-19 national emergency and public health emergency that were declared in 2020 will both end on May 11, 2023. As a result, COVID-19 cannot be the reason used to make tax-free “qualified disaster relief payments” to employees (or others) under Internal Revenue Code Sec. 139 for expenses incurred on and after that date.

Last year presented nonprofits with many challenges that will persist into 2023. Ongoing economic volatility, inflation-driven increases in operating costs, and intense competition for talent are among key issues that continue to threaten organizations’ operational and financial wellbeing. 

It can be challenging to keep track of which accounting rules are changing when the changes kick in and for which types of entities. Plus, implementing the necessary revisions to your organization’s procedures and systems often takes time and resources. Here are five updates that go live for certain entities this year.