Weekly Tax Brief

What the self-employed need to know about employment taxes

Details: Published: 20 October 2016 20 October 2016

In addition to income tax, you must pay Social Security and Medicare taxes on earned income, such as salary and self-employment income. The 12.4% Social Security tax applies only up to the Social Security wage base of $118,500 for 2016. All earned income is subject to the 2.9% Medicare tax.

Are you timing business income and expenses to your tax advantage?

Details: Published: 11 October 2016 11 October 2016

Typically, it’s better to defer tax. One way is through controlling when your business recognizes income and incurs deductible expenses. Here are two timing strategies that can help businesses do this:

Tax-smart options for your old retirement plan when you change jobs

Details: Published: 05 October 2016 05 October 2016

There’s a lot to think about when you change jobs, and it’s easy for a 401(k) or other employer-sponsored retirement plan to get lost in the shuffle. But to keep building tax-deferred savings, it’s important to make an informed decision about your old plan. First and foremost, don’t take a lump-sum distribution from your old employer’s retirement plan. It generally will be taxable and, if you’re under age 59½, subject to a 10% early-withdrawal penalty. Here are three tax-smart alternatives:

Get 2 tax benefits from 1 donation: Give appreciated stock instead of cash

Details: Published: 28 September 2016 28 September 2016

If you’re charitably inclined, making donations is probably one of your key year-end tax planning strategies. But if you typically give cash, you may want to consider another option that provides not just one but two tax benefits: Donating long-term appreciated stock.

Prepaid tuition vs. college savings: Which type of 529 plan is better?

Details: Published: 21 September 2016 21 September 2016

Section 529 plans provide a tax-advantaged way to help pay for college expenses. Here are just a few of the benefits:

Although contributions aren’t deductible for federal purposes, plan assets can grow tax-deferred.
Some states offer tax incentives for contributing in the form of deductions or credits.
The plans usually offer high contribution limits, and there are no income limits for contributing.

Documentation is the key to business expense deductions

Details: Published: 15 September 2016 15 September 2016

If you have incomplete or missing records and get audited by the IRS, your business will likely lose out on valuable deductions. Here are two recent U.S. Tax Court cases that help illustrate the rules for documenting deductions.

Tax impact of investor vs. trader status

Details: Published: 07 September 2016 07 September 2016

If you invest, whether you’re considered an investor or a trader can have a significant impact on your tax bill. Do you know the difference?

Are frequent flyer miles ever taxable?

Details: Published: 30 August 2016 30 August 2016

If you recently redeemed frequent flyer miles to treat the family to a fun summer vacation or to take your spouse on a romantic getaway, you might assume that there are no tax implications involved. And you’re probably right — but there is a chance your miles could be taxable.

3 strategies for tax-smart giving

Details: Published: 15 August 2016 15 August 2016

Giving away assets during your life will help reduce the size of your taxable estate, which is beneficial if you have a large estate that could be subject to estate taxes. For 2016, the lifetime gift and estate tax exemption is $5.45 million (twice that for married couples with proper estate planning strategies in place).

Don’t roll the dice with your taxes if you gamble this year

Details: Published: 04 August 2016 04 August 2016

For anyone who takes a spin at roulette, cries out “Bingo!” or engages in other wagering activities, it’s important to be familiar with the applicable tax rules. Otherwise, you could be putting yourself at risk for interest or penalties — or missing out on tax-saving opportunities.

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