Do you have kids in college? Or have you taken college courses to improve your job skills? The tax code has lots of ways to help you save on taxes, ranging from tax credits to deducting education expenses from your income. The IRS has an Interactive Tax Assistant that can help you determine what tax benefits you might be eligible for. We’ll also look at the whole picture for your… Read more
Are you considering a like-kind or 1031 exchange? With a like-kind exchange, you sell something you own now and replace it with similar property. If you structure the transactions correctly, you can defer any capital gains as long as you keep exchanging properties. Here are some things to keep in mind to get the best tax value out of it. The properties in an exchange must be of “like kind”… Read more
Getting a letter from the IRS is scary. But if you do the right things, the worst consequences can be avoided. Here are four things to keep in mind about letters from the IRS. Don’t panic! This letter may not be a request for more money, and it may be perfectly harmless. Sometimes the IRS makes mistakes, or gets wrong information. The IRS may even be writing to let you… Read more
Has this year been especially good for you financially? Was your business more profitable this year? Did your investments pay out big dividends or capital gains? Or did you receive an unexpected windfall? If you answered yes to any of these, now is a great time for us to compare an estimate of the Federal and state taxes you’ll owe this year to the taxes you’ve paid so far. If… Read more
Certain expenses can only be deducted as itemized deductions on your personal tax return if they exceed a threshold percentage of your AGI. For medical expenses, this is 10% if you’re under 65, 7.5% if you’re over 65. If you’ve got some expensive but non-urgent medical procedures planned, consider bumping them into next year if you don’t have enough expenses this year to qualify. Or if you already had medical… Read more
Does your business have customers in more than one state? If so, welcome to the wild world of state income taxes! Forty-five of the fifty states plus Washington, D.C. impose some type of income tax, and no two states have exactly the same tax laws. Cash-starved states are seeking out and testing new ways to tax out-of-state businesses, and you could be on their radar. An exhaustive explanation of the… Read more
This question came in to our office from a small food-manufacturing business. This was why this client was seeking the extra value of working with a CPA. Here are the questions we asked to help them find the answer: What are you using now? What’s the cost of that? Is it causing a bottleneck in your customer service? Will this help to grow your business to the next level? They… Read more
The IRS allows deductions for driving your car for business, charitable or medical purposes. Business mileage includes driving from one job to a second job, driving from your workplace to a client’s place of business, and driving to perform business tasks such as picking up office supplies or going to the post office. If you work out of your home, driving from your home to meet with a client also… Read more
A Simplified Employee Pension (SEP) is a great vehicle for self-employed solo professionals to save for retirement. A SEP lets you bank up to 25% of your net income, up to a max of $53,000 for 2016, and $54,000 for 2017, in your own individual retirement account. These plans are easy to set up at a bank or with your investment advisor. They can be set up as late as… Read more
Even if your planned retirement is years or decades away, it’s never too early to start thinking about succession planning for your business. This is especially true for a sole proprietorship or a closely-held family business. Is there a family member or key employee who may be interested in taking over? They may need time and your help to learn the skills needed for the job. Do you have a… Read more
A challenge of doing business in the U.S. is the crazy quilt of tax laws we find ourselves dealing with. Each of the 50 states plus Washington, D.C. has its own unique ways of taxing businesses. An activity that’s subject to sales tax in one state may be completely tax-free in another state. Sales of tangible goods are subject to sales tax in 45 states, and each state has different… Read more
Since 1981, the Research and Development Tax Credit, known as the R & D Credit, has been repeatedly extended for a year or so at a time, only to lapse and be extended again. The signing of the Protecting Americans from Tax Hikes (PATH) Act on December 18, 2015 was a true game changer because this credit is now permanent and better than ever. The uncertainty about its fate is… Read more
Pay attention to the timing of receipt of income and payment of expenses in your business, and you can save taxes this year. If your business uses the cash method of accounting, wait until January 1 to send out your invoices. You won’t be taxed on the income until you receive payment. If your business is on the accrual method, see if you can delay shipment or providing services until… Read more
Even if your planned retirement is years or decades away, it’s never too early to start thinking about succession planning for your business. This is especially true for a sole proprietorship or a closely-held family business. Is there a family member or key employee who may be interested in taking over? They may need time and your help to learn the skills needed for the job. Do you have a… Read more
A challenge of doing business in the U.S. is the crazy quilt of tax laws we find ourselves dealing with. Each of the 50 states plus Washington, D.C. has its own unique ways of taxing businesses. An activity that’s subject to sales tax in one state may be completely tax-free in another state. Sales of tangible goods are subject to sales tax in 45 states, and each state has different… Read more
The Bipartisan Budget Act of 2015, signed into law on November 2, 2015, closed a loophole in Social Security used by a savvy few which increased their benefits by up to $10,000 to $50,000 for a couple. In general, retirees receive larger monthly benefits the longer they wait to collect. Using a tactic known as file-and-suspend, the higher-earning spouse could file for Social Security benefits at age 66, but immediately… Read more
A Simplified Employee Pension (SEP) is a great vehicle for self-employed solo professionals to save for retirement. A SEP lets you bank up to 25% of your net income, up to a max of $53,000 for 2016, and $54,000 for 2017, in your own individual retirement account. These plans are easy to set up at a bank or with your investment advisor. They can be set up as late as… Read more
Late 2015 marked the end of the annual year-end dance in Congress when the Protecting Americans from Tax Hikes (PATH) Act became law on December 18, 2015. For the first time, many popular and tax-saving provisions were finally made permanent. Section 179 expensing was permanently increased from a measly $25,000 to a generous $500,000 per year. That amount will go up every year with inflation. Bonus depreciation is also back… Read more
Since 1981, the Research and Development Tax Credit, known as the R & D Credit, has been repeatedly extended for a year or so at a time, only to lapse and be extended again. The signing of the Protecting Americans from Tax Hikes (PATH) Act on December 18, 2015 was a true game changer because this credit is now permanent and better than ever. The uncertainty about its fate is… Read more
Thanks to the PATH Act, passed by Congress at the end of 2015, you can take the Required Minimum Distribution (RMD) from your IRA by transferring up to $100,000 directly to a qualified charity. A Qualified Charitable Distribution (QCD) counts towards an IRA owner’s RMD. A QCD doesn’t increase your taxable income, and so can’t be taken as a deductible charitable contribution. This combination can save taxes over simply donating… Read more