Anyone know if there's a threshold for how many board members can overlap before you're automatically considered related organizations? We have 2 people who serve on both our main nonprofit and our supporting foundation (out of 13 board members total on each).

This is such a helpful discussion! I'm dealing with a similar situation at our charter school network where we have a supporting foundation. One thing I wanted to add - make sure you're also checking the intermediate sanctions rules under section 4958. When you have overlapping board members between related organizations, any compensation arrangements could potentially be subject to excess benefit transaction penalties if they're not properly documented as reasonable. We learned this the hard way when the IRS questioned whether our executive director's compensation was reasonable given that she served on both boards and the foundation was paying part of her salary. We had to provide extensive documentation showing comparable salaries at similar organizations. It's worth having your compensation committee document their decision-making process and maintain records of any salary surveys or benchmarking studies used. Also, don't forget about the intermediate sanctions disclosure requirements on Schedule L - you need to report any loans, grants, or other financial transactions between the related entities, including that property lease arrangement mentioned in the original post.

Manager, please understand that what he's asking for isn't a "tax exempt week" in any official IRS sense. He's just trying to increase his take-home pay by reducing withholding. This doesn't reduce his actual tax liability at all - it just changes WHEN he pays it. If he makes $82k, he's going to owe taxes. Period. So if he gets more in his paycheck now, he'll either get less refund or owe more when he files. Make sure he understands this isn't free money!

As someone who works in payroll processing, I want to add a practical perspective here. When employees request withholding changes for temporary financial hardships, I always recommend they put a reminder in their calendar to submit a new W-4 to return to normal withholding within 1-2 months. The biggest mistake I see is people forgetting to change back, then getting hit with a big tax bill they weren't expecting. If your employee does adjust his withholding, maybe suggest he set up that reminder right away while it's fresh in his mind. Also, depending on your payroll system, some allow you to set an "end date" for withholding changes, which automatically reverts back to the previous settings. Worth asking your payroll department if that's an option - it removes the human error factor completely.

Quick tip for anyone dealing with UNICAP issues - keep meticulous records of all your construction costs separated by direct vs indirect categories. Even with the small business exemption, if you ever cross that $25M+ threshold (which adjusts for inflation yearly), you'll suddenly need full UNICAP compliance, and having good systems already in place will save you enormous headaches.

Great discussion here! I'm also in construction and wanted to add that the inflation adjustment for the $25M threshold is something to watch closely. For 2024, it's $29.2M and for 2025 it's $30M. Also worth noting that the gross receipts test looks at a 3-year average, so if you have one big year that pushes you over, you might still qualify for the exemption if your 3-year average stays under the limit. One thing I learned the hard way - even with the UNICAP exemption, you still need to be careful about Section 461(l) limitations on business losses if you're a pass-through entity. The loss limitation rules can still apply even when you're expensing more costs upfront due to the UNICAP exemption.

PLEASE DON'T IGNORE THIS VERIFICATION REQUEST! I made that mistake last year thinking it was optional or a scam. Six months later, still no refund, and I had to go through an even more complicated process to get my money! The IRS won't process your return until you complete verification, and they only hold it for a certain period before rejecting it entirely. I was so angry when I found out I could have resolved it in 15 minutes online instead of the nightmare I went through.

I went through this exact same process last month after filing with significant capital gains from stock sales. The verification is definitely legitimate and becoming more common - I'd estimate about 1 in 5 people I know with investment income got selected this year. The good news is that once you complete the ID.me verification (which takes about 10-15 minutes), your refund should process within 2-3 weeks. I was worried about delays too, but mine actually came through faster than expected. Just make sure you're using the official IRS links and not clicking anything from emails. The verification doesn't mean you did anything wrong - it's just their way of preventing fraud given the increase in identity theft cases.

Don't forget that QBI gets reported on Form 8995 (simplified) or 8995-A (full) depending on your income level. I messed this up my first year and just put the deduction on Schedule C which was totally wrong!

Just wanted to add another important point about QBI that I learned the hard way - the deduction is subject to an overall limitation of 20% of your taxable income MINUS net capital gains. This usually isn't an issue for most people, but it can come into play if you have significant capital losses or other deductions that bring your taxable income way down. Also, make sure you're tracking all your business expenses carefully throughout the year. Since QBI is calculated on your net business income (after expenses), every legitimate business deduction you can take will increase your QBI deduction. Things like home office expenses, business meals (50% deductible), professional development, software subscriptions, etc. can all add up to meaningful tax savings. One more tip - if you're planning to scale up your side business, consider whether forming an S-Corp might make sense once your income gets higher. The tax implications change significantly, but it can sometimes result in overall tax savings when you factor in both QBI and self-employment tax considerations.