If You Have Student Debt, You Should Be Nervous About Trump’s Pick for Education Secretary
Update 2/7: This morning in a historic vote, the Senate confirmed Betsy DeVos as White House Education Secretary in a 51-50 vote. All 48 Democratic Senators voted against DeVos as did two Republican Senators (Senators Susan Collins of Maine and Lisa Murkowski of Alaska). For the first time in history, Vice President Mike Pence was summoned to the Capitol to break the tie.
The decision did not come without a hard fight from Democrats. They held a marathon floor session all night last night hoping to persuade at least one more Republican to vote against her nomination. They were unable to do so.
If you haven’t heard of a significant portion of Trump’s cabinet picks, that’s not because you’re uninformed. It’s because — for a lot of them — this is their first official foray into a political position of this ranking. The non-traditional approach is very much in line with Trump’s plan to “drain the swamp,” but for some members of the Senate (and the public), it’s concerning that a portion of the people with the most power in government will have the least experience. One newcomer up for a crucial position: Betsy DeVos. DeVos was nominated by Trump to be the country’s education secretary. DeVos had her confirmation hearing with the Senate yesterday and it was um, tense, to say the least.
With an ongoing student debt crisis and uncertainty about the funding and safety of the public education system, this facet of government is one that will (or should) require a significant amount of attention and change over the next four years. If you’re a millennial with student loans (which is more than 70 percent of you), a mom who is putting her kids in the public education system or a teacher who wants to make sure you and your students remain safe while in school, DeVos’ actions as education secretary will have a direct effect on your life. Below is a brief rundown of her background, what she’ll be in charge of as education secretary and the highlights of what went down during her confirmation hearing.
WHO IS SHE + What does she stand for?
Betsy DeVos is the former chair of the Michigan Republican Party. DeVos has experience working in the education world, but not necessarily in the public education realm, an important distinction to note. In fact, in the education sector she is known for her advocacy of public school alternatives like charter schools, private schools and the distribution of school vouchers, a certificate of government money given to a family for a student to attend a charter, private or religious school of their choosing.
Her extensive support of charter schools is concerning for many in government because some of these are schools that are funded publicly but run privately, which has the potential to elevate the risk of fraud throughout the system. Considering the president-elect’s recently settled Trump University fraud scandal, this fear is top of mind for many who are wary of her potential agenda.
For many, it’s also a major point of contention that DeVos and her husband have donated a significant amount of money to the GOP over the years. During her confirmation hearing, Senator Bernie Sanders asked DeVos if that total was somewhere in the $200 million range. She said she didn’t know the exact amount but that that number is plausible.
WHAT exactly will HER JOB be AS EDUCATION SECRETARY?
DeVos’ advocacy of education privatization is troublesome for the Senate and her adversaries because the education secretary’s role is listed on the US Department of Education’s website as follows: The mission of the Department of Education is to ensure equal access to education and to promote educational excellence throughout the nation.
She will be the principal adviser to Trump’s White House on federal policies, programs and activities related to education in the US. DeVos will also oversee the education department’s programs that provide grants, loan and work-study assistance to about 10 million undergraduate students. For reference, the government gives out $150 billion in financial assistance and is responsible for managing a trillion dollar student loan bank.
HOW DID HER CONFIRMATION HEARING GO?
All of the concerns mentioned throughout this story were brought to the surface during DeVos’ confirmation hearing yesterday. Democratic Senators Elizabeth Warren, Bernie Sanders, Tim Kaine and a few others hit DeVos with hard-hitting questions, many of which DeVos did not have concrete answers for.
Warren focused her few minutes interviewing DeVos on her lack of experience with public education. She asked DeVos if she has had any direct experience running a bank and if she’s ever overseen a trillion dollar loan program or even a billion dollar loan program. She also asked DeVos if she’s ever participated in a loan program if she has ever attended a public school, if any of her children have attended a public school and if she or any of her children have taken out a student loan. In short, her response to all of those questions was no.
When it was Bernie Sanders’ turn to chat with DeVos, he wanted to know her thoughts on the cost of higher education. Sanders is famous for his belief that public colleges and universities should be free, and he wanted to know if DeVos agrees with him. She didn’t exactly give a direct answer, replying, “I think that’s a really interesting idea.” Sanders brought up the fact that billionaires are receiving tax breaks while low-income students still can’t afford to go to college and asked if DeVos would fix this; again, she didn’t really answer the question.
Throughout the three-and-a-half-hour hearing, DeVos was also asked if test scores should measure a student’s proficiency, about her involvement in anti-LGBTQ organizations and, importantly, her thoughts on gun safety in schools. On that topic, she said, “I would imagine that there’s probably a gun at the school to protect from potential grizzlies.”
A large portion of Trump’s proposed cabinet is set to be voted on and confirmed by the Senate by Inauguration Day.
(Photo via Betsy DeVos)
Welcome to Selfmade Finance School, our new money series with Block Advisors to help small business owners with their tax, bookkeeping, and payroll needs year-round. This week, we explore the tax implications of bringing family members into your business.
The question for today is this: Does hiring your family members make sense for your business? Let me be clear. This is not a piece about whether hiring your family members makes sense for your relationships with those family members. As someone who is part of a family business, I could fill up a lot more than 600 words on my opinions about that. For today's purposes, we focus on whether it makes sense from an overall "good business and tax implication" perspective. As it turns out, there is a decent amount of tax nuance when it comes to employing your family. Let's break it down based on relationship to the employee:
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Spouses Who Are In Business Together
Personally, if I had to be in business with my husband, it would not go well. However, many couples build viable, strong businesses together and I say, good for them! Depending on how you have your business entity structured, it will make a big difference on the tax treatment of you and your spouse working as partners. Because a business jointly owned and operated by a married couple is generally treated as a partnership for Federal tax purposes, the spouses must comply with filing and record keeping requirements imposed on partnerships and their partners. The election to file two Schedule C (Form 1040) forms, (one for each spouse) permits certain married co-owners to avoid filing partnership returns, provided that each spouse separately reports a share of all the businesses' items of income, gain, loss, deduction, and credit. Under the election, both spouses will be subject to self-employment tax and on net earnings from self-employment and receive credit for Social Security earnings.
One Spouse Employs Another
If you have a dynamic where your spouse is an employee of your business, then your spouse's wages are subject to income tax withholding, Social Security and Medicare taxes. If you are self-employed (not a corporation or a partnership), your spouse's pay does not have to be included in your federal unemployment tax account (FUTA) contributions and payments. However, if your business is a corporation or a partnership you must include that spouse's pay in your unemployment tax contribution calculation.
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You Employ Your Child
First, let's be clear. I work in my family business, but I am an adult, so I am treated just like a normal employee. However, if you, for example, run a family restaurant and want to hire your children under 18 to work for you, there are some tax benefits. But first, you should check with your state for rules on how many hours minors can work (in non-agricultural jobs) and reference the Fair Labor Standards Act for information on limitations on the kinds of work children can perform.
"This is an often overlooked or under-utilized strategy. Paying your children for true services they provide in your business can be a powerful tax-saving tool," says Cathi Reed, Block Advisors Regional Director. "If you are a sole-proprietorship or single member LLC, and the child is less than 18 years of age, the business is not required to withhold FICA or payroll taxes. The child can use his or her standard deduction against income you pay."
You Hire Your Parent
Oh dear. If you are brave enough to do this, know that you will need to pay Social Security and Medicare taxes on your parent's wages and make the appropriate withholdings, but you don't have to pay unemployment taxes. Now all you have to do is convince your parent that you are the boss. Have fun with that!
Is Hiring Family Members Worth It For The Tax Benefits?
"There are some positive tax advantages to hiring family members. It's important to treat a family member like any other employee. Hiring your children can result in substantial savings for businesses. Make sure your child has real, age-appropriate work to do and a reasonable pay rate, comparable to other employees. Consult with a Block Advisors small business certified tax pro to ensure that you are complying with all requirements," advises Reed. "Block Advisors, a team within H&R Block, is dedicated to meeting the tax, bookkeeping and payroll needs of small business owners year-round. To start working with the tax experts at Block Advisors, visit blockadvisors.com."
In my opinion, you should not hire a family member solely because of the tax benefits. You should always hire based on whether that person is right for the job and keep in mind how this hire could materially impact your relationship with that person and others in your family. Finally, as I mentioned, make sure you have a tax professional on your team when making these determinations. As you can see, things can get a little tricky!
*All details were sourced from IRS.gov and blockadvisors.com