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Small Business: Deductions for Charitable Giving

Small Business: Deductions for Charitable Giving

by | Dec 29, 2020 |

How Your Business Benefits By Giving Back Tax breaks for charitable giving aren't limited to individuals, your small business can benefit as well. If you own a small to medium-size business and are committed to giving back to the community through charitable giving, here's what you should know. 1. Verify that the Organization is a Qualified Charity Once you've identified a charity, you'll need to make sure it is a qualified charitable organization under the IRS. Qualified organizations must meet specific requirements as well as IRS criteria and are often referred to as 501(c)(3) organizations. Note that not all tax-exempt organizations are 501(c)(3) status, however. There are two ways to verify whether a charity is qualified: Use the IRS online search tool; or Ask the charity to send you...

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Tax Tips for December 2020

Tax Tips for December 2020

by | Dec 21, 2020 | ,

Click on the links below to jump to each section in this article: Retirement Contributions Limits Announced for 2021 Solar Technology Tax Credits Still Available for 2020 Relief for Drought-Stricken Farmers and Ranchers Beware of Gift Card Tax Scams Charitable Donation Deduction Could Lower Your Tax Bill   Retirement Contributions Limits Announced for 2021 Cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for 2021 are as follows: 401(k), 403(b), 457 plans, and Thrift Savings Plan. Contribution limits for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan remains unchanged at $19,500. The catch-up contribution limit for employees aged 50 and over remains unchanged at...

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Working Remotely Could Affect Your Taxes

Working Remotely Could Affect Your Taxes

by | Dec 18, 2020 | ,

What You Need to Know When COVID-19 struck last March, employers quickly switched to a work-from-home model for their employees, many of whom began working in a state other than the one in which their office was located. While some workers have returned to their offices, many have not. If you're working remotely from a location in a different state (or country) from that of your office, then you may be wondering if you will have to pay income tax in multiple jurisdictions or whether you will need to file income tax returns in both states. Generally, states can tax income whether you live there or work there. Whether a taxpayer must include taxable income while living or working in a particular jurisdiction depends on several factors, including nexus, domicile, and residency. Many states...

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Business Tax Provisions: The Year in Review

Business Tax Provisions: The Year in Review

by | Dec 14, 2020 |

Here's what business owners need to know about tax changes for 2020. Standard Mileage Rates The standard mileage rate in 2020 is 57.5 cents per business mile driven. Health Care Tax Credit for Small Businesses Small business employers who pay at least half the premiums for single health insurance coverage for their employees may be eligible for the Small Business Health Care Tax Credit as long as they employ fewer than the equivalent of 25 full-time workers and average annual wages do not exceed $50,000 (adjusted annually for inflation). This amount is $55,200 for 2020 returns. In 2020 (as in 2014-2018), the tax credit is worth up to 50 percent of your contribution toward employees' premium costs (up to 35 percent for tax-exempt employers). Section 179 Expensing and Depreciation Under...

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Tax Tips for December 2020

Tax Tips for November 2020

by | Nov 23, 2020 | ,

Click on the links below to jump to each section in this article: Seasonal Workers and the Healthcare Law Tips for Taxpayers: Backup Withholding Tax-Related Items To Keep in Mind When Disaster Strikes Individual Retirement Arrangements: Terms To Know   Seasonal Workers and the Healthcare Law Businesses often need to hire workers on a seasonal or part-time basis. For example, some businesses may need seasonal help for holidays, harvest seasons, commercial fishing, or sporting events. Whether you are getting paid or paying someone else, questions often arise over whether these seasonal workers affect employers with regard to the Affordable Care Act (ACA). For the purposes of the Affordable Care Act the size of an employer is determined by the number of employees. As such,...

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Investing in Opportunity Zones: The Facts

Investing in Opportunity Zones: The Facts

by | Nov 19, 2020 |

The Tax Cuts and Jobs Act included numerous changes for businesses and individuals. One of these was the creation of the Opportunity Zones tax incentive, the purpose of which is to spur economic development and job creation in distressed communities by providing tax benefits to investors. Which Communities Qualify as Opportunity Zones? Low-income communities and certain contiguous communities qualify as Opportunity Zones if a state, the District of Columbia, or a U.S. territory nominated them for that designation and the U.S. Treasury certified that nomination. Using this nomination process, 8,764 communities in all 50 states, the District of Columbia, and five U.S. territories were certified as Qualified Opportunity Zones (QOZs). Congress later designated each low-income community in...

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Year-End Tax Planning Strategies for Business Owners

Year-End Tax Planning Strategies for Business Owners

by | Nov 17, 2020 |

Several end-of-year tax planning strategies are available to business owners that can be used to reduce their tax liability. Let's take a look: Deferring Income Businesses using the cash method of accounting can defer income into 2021 by delaying end-of-year invoices so that payment is not received until 2021. Businesses using the accrual method can defer income by postponing the delivery of goods or services until January 2021. Purchase New Business Equipment Bonus Depreciation. Businesses are allowed to immediately deduct 100% of the cost of eligible property placed in service after September 27, 2017, and before January 1, 2023, after which it will be phased downward over a four-year period: 80% in 2023, 60% in 2024, 40% in 2025, and 20% in 2026. Section 179 Expensing. Businesses...

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Individual Taxpayers: Year-End Tax Planning Strategies

by | Nov 10, 2020 |

With the end of the year fast approaching, now is the time to take a closer look at tax planning strategies you can use to minimize your tax burden for 2020. General Tax Planning Strategies General tax planning strategies for individuals include accelerating or deferring income and deductions, as well as careful consideration of timing-related tax planning strategies concerning investments, charitable gifts, and retirement planning. For example, taxpayers might consider using one or more of the following strategies: Investments. Selling any investments on which you have a gain (or loss) this year. For more on this, see Investment Gains and Losses, below. Year-end bonus. If you anticipate an increase in taxable income this year, in 2020, and are expecting a bonus at year-end, try to get...

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Tax Preparation vs. Tax Planning

Tax Preparation vs. Tax Planning

by | Nov 6, 2020 |

Many people assume tax planning is the same as tax preparation, but the two are quite different. Let's take a closer look: What is Tax Preparation? Tax preparation is the process of preparing and filing a tax return. Generally, it is a one-time event that culminates in signing your return and finding out whether you owe the IRS money or will be receiving a refund. For most people, tax preparation involves one or two trips to your accountant (CPA), generally around tax time (i.e., between January and April), to hand over any financial documents necessary to prepare your return and then to sign your return. They will also make sure any tax reporting on your return complies with federal and state tax law. Alternately, Individual taxpayers might use an enrolled agent, attorney, or a tax...

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