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SOCIAL SECURITY COLA FOR 2021

Tuesday, October 13th, 2020

October 13, 2020:
The Social Security Administration has announced the Cost-of-Living Adjustment (COLA) for 2021. 

The PRESS RELEASE states:

Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 1.3 percent in 2021.

The 1.3% COLA can be applied by multiplying the current award amount by 1.013.

For management staff, be sure to apply the COLA to benefits for the appropriate number of months based on the effective date of the certification.

Example:

Mrs. Smith would like to move in on November 1, 2020.  Her 2020 gross Social Security monthly amount is $1,050.  You will calculate her Social Security income as follows:

$1,050 x 2 = $2,100 (November and December 2020)

$1,050 x 1.013 = $1,063.65 (2021 monthly amount)

$1,063.65 x 10 = $10,500 (January to October 2021)

$2,100 + $10,500 = $12,600 (12 months)

If you have already processed files for move-in during January 2021, it is recommended that you review the household income and apply the COLA to benefits issued by the Social Security Administration since it is a known anticipated change in income.

Pre Approval Report Formatting – 8/17/2020

Monday, August 17th, 2020

Written by Deb Bechetti & Lainey Nadeau

Spectrum is using a new format for documenting comments and corrections on the pre-approval report.  These changes are being made in an effort to have consistent formatting and wording in all pre-approvals, regardless of the assigned analyst.  These changes also make the outstanding issues more apparent to the property so that corrections can be more precise.

There are now 2 headings under COMMENTS on the report when corrections are required. 

RESPONSE REQUIRED

PROCEDURAL ISSUES (Informational only) 

When the corrections are received the analyst will add a response and date to the report addressing each numbered item. If the correction is adequate ISSUE CLEARED will be noted next to the response.  

If the correction is not adequate Spectrum will add additional comments.

Files will be rated 2 until all comments under RESPONSE REQUIRED have been CLEARED. 

The comments under PROCEDURAL ISSUES are informational only. Files with procedural comments only will be rated 1 and corrections should not be resubmitted. 

If a file is not approved it will be rated 3 with the following comment and should not be resubmitted. 

Let’s Talk About Tips, Baby

Friday, July 17th, 2020

Written by Madeline Groeger & Jennifer Robinson

We are all familiar with the fact that “employment income includes (but is not limited to) hourly wages, salaries, overtime pay, tips, bonuses, and commissions before any payroll deductions.” (Page 4-8 IRS Guide to Completing Form 8823).  Whether referred to as tips or gratuity, any discretionary payments a person receives from customers is considered income. According to the IRS, tips include:

  • Cash tips received directly from customers.
  • Tips from customers who leave a tip through electronic settlement or payment.  This includes a credit card, debit card, gift card, or any other electronic payment method.
  • The value of any noncash tips, such as tickets, or other items of value.
  • Tip amounts received from other employees paid out through tip pools or tip splitting, or other formal or informal tip sharing arrangement. 

(https://www.irs.gov/businesses/small-businesses-self-employed/tip-recordkeeping-and-reporting)

That means tips can take many forms.  It also means that tips can appear in many different ways on an employee’s pay stubs, and it can be very confusing.  Quite often the total pay on a pay stubs is less than the sum of its parts, and that often goes unnoticed.

Follow this example:

Type

Hours

Rate

Total

Regular

80

$2.75

$ 220.00

Over Time

20

$4.13

$   82.60

Charge Tips

 

 

$ 274.40

Cash Tips

 

 

$ 200.00

Less Tips

 

 

$-190.00

TOTAL

 

 

$ 587.00

 

What amount do you use for gross income?

None of the above.  Also, most of the above.

We have to consider the hourly pay: $220 Regular + $82.60 OT = $302.60

It’s the tips that add confusion: $274.40 Charge + $200 Cash = $474.40

Gross income is $302.60 + $474.40 = $777.00

That number does not appear anywhere above.

 

What about the $190 on the “Less Tips” line?

Of the $200 in cash tips reported, the employee kept $190 in cash during this pay period.  The other $10 was turned in to the employer.  The cash tips they kept are reported on the pay stubs, but it does not show up in the total pay because they already kept the cash.  The employee will be taxed on the total cash tips because it is income.

 

Do all pay stubs for tipped employees look like this?

No.  There are a million different variations.  Depending on where the person works, this type of income could appear as cash, charge, tokens, credit, gratuity, or under a number of other names on pay stubs.

 

Are all tips always reported on pay stubs?

Again, no.  Many tipped employees do not report their cash tips.  This is a violation of tax code, but a fact of life.  Which is why it is important to ask some follow up questions:

  1. Do you receive tips or gratuities at this job?
  2.  Please list the average amount of tip/gratuity received:
  3.  Are all tips reported to the employer?                 

On our website you will find the Tip & Gratuity Affidavit designed specifically for this purpose.

https://spectrumlihtc.com/wp-content/uploads/Tip-Affidavit-2.pdf

The answers should make sense.  Is this person a hairdresser reporting no tips?  Are they a bartender at a popular cash-only bar claiming they barely clear minimum wage?  Don’t be afraid to ask follow-up questions and get the household member to answer them in writing.  If it just doesn’t add up, or leaves you feeling uncomfortable, get a second opinion from a colleague, the state credit agency, or a consultant.

Additional Fees Charged at Tax Credit Properties

Monday, July 13th, 2020

Written by Laurie Palmeira

It isn’t always clear what fees can be charged at a tax credit property. Spectrum analysts are often asked: “Can we charge for the use of _____?”

The only way to answer this question is by asking a question: “Is _____ included in the eligible basis?”

One of the ways tax credit properties find themselves out of compliance is by charging fees for use of amenities that were included in the property’s eligible basis.  As a component of the qualified basis, the eligible basis of a property includes the portion of the property for which credits were allocated. Often times, in addition to tax credit units and common areas, the qualified basis of a project includes parking areas, swimming pools, garages, and other fixed assets.  A basic explanation is that if it’s in the eligible basis, you cannot charge for it. 

Prior to charging any fees at a property, be aware of which fixed assets were included in the basis.  If the property received credits for the tennis court and garage, they are part the eligible basis therefore fees cannot be charged for use of those amenities. 

Since fees cannot be charged to tenants, can they be charged to individuals visiting tenants or to people in the community? 

Unfortunately, the answer is no.  If the parking lot is part of your eligible basis, fees cannot be charged to visiting individuals wishing to park there.  The same is true for tenant visitors wishing to use the swimming pool.

What about fees for optional services at your project, such as housekeeping or meals? 

As long as the services are optional and not a condition of occupancy, then fees can be charged for those services.  If, however, there are non-optional services that all tenants must pay for as a condition of occupancy, then the fees associated with such must be included in the gross rent. Keep in mind that tax credit rents are restricted, and that a maximum allowable rent according to the IRS formula must include all those non-optional utilities, fees, and services. 

Under Treas. Reg. 1.42-11(a)(3), the cost of services that are required as a condition of occupancy must be included in the gross rent even if federal or state law required that the services be offered to tenants by building owners.  According to the IRS Guide for Completing Form 8823, assuming the charges are optional, pet fees, laundry room fees, and storage fees may be charged in addition to the rent; i.e., they are not included in rent computation. (Give Page Numbers for reference). Best practice would always be to inquire with your state agency prior to implementing any new charges. There may be an additional lease addendum or separate agreement required by the state agency for optional services and charges.

Are application fees acceptable?

As far as application fees go, only the amount the owner incurs for processing the application may be charged to the prospective tenant.  For example, if the real cost of processing an application including background and credit checks only amounts to $25.00, the owner cannot charge $50.00.  No amount may be charged in excess of the expected out-of-pocket costs.

As with many issues in the tax credit world, it boils down to excellent record keeping and a thorough knowledge of your project and how credits were allocated to most certainly save you from fee-related compliance issues down the road.

2020 Income Limits

Wednesday, April 1st, 2020

Written by Lesley Murray, Spectrum Enterprises

HUD has announced the 2020 income limits for the MTSP housing programs effective April 1, 2020. This includes low income housing tax credits and tax exempt bond financing. HUD allows for a 45 day grace period, which means these limits must be in use by May 15, 2020.

Our advice to all housing professionals is to immediately check for an increase for your sites. If the income limits in your area have increased go back through any files denied over the past few months to see if any slightly over income households may qualify under the new limits.

To find your 2020 income limits visit this site (and make sure to bookmark it!):

https://www.huduser.gov/portal/datasets/mtsp.html

Choose FY2020 MTSP Income Limit Documentation System then click on the grey button on the next page.

On the next page choose your state and then your county or city.

The result will look something like this:

Depending on the placed in service (PIS) date for your project you will use either the HERA special limits (top chart) or the FY (Fiscal Year) limits on the bottom chart. Or you could be held harmless to a prior year.

HUD provides the 50% and 60% income limits. HUD does not provide rent limits or limits for lower set asides such as 40%. Spectrum has created an Excel spreadsheet, see LIHTC Income & Asset Worksheet under Spectrum resources page (***Spectrum Forms***) to accomplish this. After you download the spreadsheet you can enter the placed in service date for your project; the State; the city/town/county; and then you enter the 50% income limits from the HUD page into the yellow shaded line in the spreadsheet. Formulas written into the spreadsheet will calculate the 40% and 60% income limits along with all corresponding gross rent limits.

If you want to manually calculate your rent limits this is the formula:

  • 0BR: (1 person income limit x 0.3)/12
  • 1BR: (1.5 person income limit x 0.3)/12
    *1.5 person income limit = (1 person + 2 person)/2
  • 2BR: (3 person income limit x 0.3)/12
  • 3BR: (4.5 person income limit x 0.3)/12
    *4.5 person income limit = (4 person + 5 person)/2
  • 4BR: (6 person income limit x 0.3)/12

We frequently see properties using the incorrect income and rent limits. There is a lot of confusion surrounding this. Fortunately, there are many resources available to provide guidance.

  • This blog (originally posted in December 2012) provides guidance on what to do if income limits in your area have decreased.
  • This blog (originally posted in January 2013) provides good explanation on choosing the correct income limits based on the building placed in service date.
  • IRS newsletters #47, 48, and 50 all contain helpful guidance on how to correctly apply income limits.

As a final note, we always suggest updating your utility allowances at the beginning of the year or when new income limits are published. If you are not sure how to determine the correct UA for your property please refer to Chapter 18 of the 8823 Guide.

Spectrum is Hiring!

Thursday, November 7th, 2019

Affordable Housing Compliance Analyst

Spectrum Enterprises Inc specializes in compliance oversight for the low-income housing tax credit (LIHTC) program. Our services include document analysis, tenant file reviews, application pre-approvals, client training, and site inspections of previously certified low income housing units. Our national roster of clients includes state housing agencies, leading investors, syndicators, developers, and asset and property management companies.

The position is physically located in our corporate office and is not open to a telecommuting or home office arrangement. Our current office will be re-locating before year end from Cape Elizabeth to the Maine Mall area in South Portland.

This is a permanent full time position requiring the following skills and professional characteristics, with previous LIHTC compliance analysis and/or familiarity is strongly preferred:

  • Industry training and certification (C3P, HCCP, COS, etc.) and/or prior experience with state agency compliance manuals, IRS forms and guides, and the HUD 4350.3 handbook
  • Highly organized and reliable person with analytical mind, attention to detail, strong math skills
  • Excellent written and verbal communication is essential
  • Must be an independent, motivated, and resourceful person with the ability to balance multiple projects and deadlines
  • Strong computer skills including internet searches, email, Word, Excel, Google, and working in a network environment with shared drives

Spectrum is an equal opportunity employer. We offer a competitive starting salary and opportunity for growth. Employees receive a generous benefit package including medical, vision, dental, life, STD, LTD, 18 paid personal days and 9 holidays each year to start, and 401k plan participation after 1 year of service and a yearly employer contribution.

Candidates must submit a cover letter and resume and must pass a background check.

If interested please apply online at www.Indeed.com.

SOCIAL SECURITY COLA FOR 2020

Thursday, October 10th, 2019

October 10, 2019: The Social Security Administration has announced the Cost-of-Living Adjustment (COLA) for 2020.  According to www.ssa.gov:

“Social Security and Supplemental Security Income (SSI) benefits for nearly 69 million Americans will increase 1.6 percent in 2020.

The 1.6 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 63 million Social Security beneficiaries in January 2020. Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2019. (Note: some people receive both Social Security and SSI benefits)”

You can add the 1.6% COLA by multiplying the current award amount by 1.016.

For management staff, be sure to apply this COLA to benefits for the appropriate number of months. 

Example:

Mrs. Smith would like to move in on December 1, 2019.  Her 2019 gross Social Security monthly amount is $928.  You will calculate her Social Security income as follows:

$928 x 1.016 = $942.85 (2020 monthly amount)

$928 x 1 = $928 (December 2019)

$942.85 x 11 = $10,371.33 (January – November 2020)

$928 + $10,371.33 = $11,299.33 (12 months)

If you have already processed files for move-in for January 2020, it is recommended that you review the household income and apply the COLA to benefits issued by the Social Security Administration since it is a known anticipated change in income.

 

SOCIAL SECURITY COLA FOR 2019

Thursday, October 11th, 2018

October 11, 2018: The Social Security Administration has announced the Cost-of-Living Adjustment (COLA) for 2019.  According to www.ssa.gov:

“Social Security and Supplemental Security Income (SSI) benefits for more than 67 million Americans will increase 2.8 percent in 2019.

The 2.8 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 62 million Social Security beneficiaries in January 2019. Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2018.”

You can add the 2.8% COLA by multiplying the current award amount by 1.028.

For management staff, be sure to apply this COLA to benefits for the appropriate number of months. 

Example:

Mrs. Smith would like to move in on December 1, 2018.  Her 2018 gross Social Security monthly amount is $928.  You will calculate her Social Security income as follows:

$928 x 1.028 = $953.98 (2019 monthly amount)

$928 x 1 = $928 (December 2018)

$953.98 x 11 = $10,493.78 (January – November 2019)

$928 + $10,493.78 = $11,421.78 (12 months)

If you have already processed files for move-in for January 2019, it is recommended that you review the household income and apply the COLA to benefits issued by the Social Security Administration since it is a known anticipated change in income.

 

2017 Income Limits

Friday, April 14th, 2017

HUD has announced the 2017 income limits for the MTSP housing programs effective April 14, 2017. This includes low income housing tax credits and tax exempt bond financing. HUD allows for a 45 day grace period, which means these limits must be in use by May 29, 2017.

Our advice to all housing professionals is to immediately check for an increase for your sites. If the income limits in your area have increased go back through any files denied over the past few months to see if any slightly over income households may qualify under the new limits.

To find your 2017 income limits visit this site (and make sure to bookmark it!):

https://www.huduser.gov/portal/datasets/il.html

2015-2016 Staffing Changes

Thursday, April 21st, 2016

The private monitoring division has experienced consistent growth over the past several years and we have made the following staffing adjustments to better serve our clients.

1. Jen Borland is now the main point of contact for all of our “File Pre Approval” work. Jen has taken an increased role in this division to oversee a staff of 12 full time employees providing this service to over a thousand properties across the US. If you have any questions about this service or want to request a proposal – please contact Jen Borland directly. (207) 805-0025 or jborland@spectrumlihtc.com

2. Jennifer Borland is now the main point of contact for all of our “Tenant File Training” work. Jennifer has several years experience providing LIHTC compliance reviews for hundreds of properties throughout the US. In recent years she has been delivering full day training sessions to groups of property managers on how to certify low income tenants and successfully maintain tenant file records to achieve clean reports from investor and state agency partners. If you have any questions about this service or want to request a proposal – please contact Jennifer Borland directly. (207) 805-0025 or jborland@spectrumlihtc.com

3. As of January 2016 Wesley Chisholm has been with Spectrum for 2 full years. In his current role, Wes has been the main point of contact for many of our clients to get proposals and contracts in place; working with sites on how to submit files to our office using our online portal; generating all invoices; and helping to shape the format of all reporting used by Spectrum. Wes will be gradually moving out of this role as he is being promoted to a full time compliance analyst. We have hired Daniel Warren to take over the role being vacated as a result. Daniel is a recent graduate of the inaugural Property Management Training class at Southern Maine Community College here in South Portland, ME. Wesley Chisholm: (207) 805-0028 or weslihtc@gmail.com Dan Warren: (207) 805-0933 or dwarren@spectrumlihtcom

4. It is always exciting to share news of promotions and new hires. Unfortunately, we are also losing a member of our staff who has been with us since 2009.  Melissa Flavell has given her notice and, while we have been very fortunate to have her part of our team for so long, we will miss working with her. Melissa has impressed many people throughout the industry with her dedication to providing compliance services of a very high caliber. She has been a terrifically dependable employee and many clients have expressed to me how grateful they are with the quality and care of her work. Hers will be large shoes to fill. Good luck with your next endeavor!

5. Tami Peterson has recently been hired by Spectrum as a full time Compliance Analyst. Tami has worked locally in Southern Maine for over 15 years in various affordable housing programs including HUD, HOME, LIHTC, and USDA. Most of her time was spent working for a public housing authority and she is extremely knowledgeable on LIHTC properties with mixed funding. Tammi: tpeterson@spectrumlihtc.com

6. In 2015 we were fortunate to add 2 additional Compliance Analysts to our company. Both Jennifer Guptill and Carolyn Price joined our team last year bringing with them a strong background in LIHTC compliance auditing. They both have worked extensively to properties in several states and with multiple sources of funding. Jennifer: (207) 805-0024 or jenlihtc@gmail.com, Carolyn: (207) 805-0041 or carolynlihtc@gmail.com.


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