How to avoid getting hit with payroll tax penalties

 

 

For small businesses, managing payroll can be one of the most arduous tasks. A crucial aspect is withholding and remitting to the federal government the appropriate income and employment taxes. If your business doesn’t, you, personally, as the business’s owner, could be considered a “responsible party” and face a 100% penalty. This is true even if your business is an entity that normally shields owners from personal liability, such as a corporation or limited liability company. Hiring a payroll service can help. Contact us to learn more.

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3 traditional midyear tax planning strategies for individuals that hold up post

Certain strategies that were once tried-and-true will no longer save or defer tax. But some will hold up for many taxpayers. And they’ll be more effective if you begin implementing them this summer, rather than waiting until year end. Consider these three: 1) Take steps to stay out of a higher tax bracket, such as accelerating deductible expenses. 2) Bunch medical expenses into 2018 to exceed the low 7.5% of AGI deductibility floor. 3) Sell depreciated investments to generate losses to offset realized gains. Contact us to discuss your midyear planning.

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Does your business have to begin collecting sales tax on all out-of-state online sales?

The recent U.S. Supreme Court decision in South Dakota v. Wayfair allows states to impose sales tax on more out-of-state online sales. But does it mean your business must immediately begin collecting sales tax on online sales to all out-of-state customers? No. You must collect such taxes only if the particular state requires it. South Dakota’s law, for example, requires out-of-state retailers that made at least 200 sales or sales totaling at least $100,000 in the state to collect sales tax. But laws vary dramatically from state to state. Contact us with questions.

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What you can deduct when volunteering

While donations to charity of cash or property generally are tax deductible (if you itemize), donations of time or services aren’t. But you potentially can deduct out-of-pocket costs associated with volunteer work, such as supplies, uniforms, transportation and even travel. To be deductible, the costs can’t be reimbursed or be “personal, living or family” expenses. And they must be directly connected to the services you’re providing and be incurred only because of your volunteering. Additional rules apply; contact us with questions.

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Choosing the best business entity structure post-TCJA

For tax years beginning in 2018 and beyond, the Tax Cuts and Jobs Act (TCJA) created a flat 21% federal income tax rate for C corporations. Under prior law, C corporations were taxed at rates as high as 35%. The TCJA also reduced individual income tax rates, which apply to sole proprietorships and pass-through entities, including partnerships, S corporations, and, typically, limited liability companies (LLCs). The top rate, however, dropped only slightly, from 39.6% to 37%. 

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Home green home: Save tax by saving energy

“Going green” at home can reduce your tax bill in addition to your energy bill, all while helping the environment. To reap all three benefits, you need to buy and install certain types of renewable energy equipment in your home. For 2018, you may be eligible for a tax credit of 30% of expenditures for installing qualified solar electricity generating equipment, solar water heating equipment, wind energy equipment, geothermal heat pump equipment and fuel cell electricity generating equipment. Additional rules and limits apply. To learn more, contact us.

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2018 Q3 tax calendar: Key deadlines for businesses and other employers

Here are some key tax-related deadlines for businesses and other employers during Quarter 3 of 2018. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

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Do you know the ABCs of HSAs, FSAs and HRAs?

Do you know the ABCs of HSAs, FSAs and HRAs? The accounts in this “alphabet soup” offer tax-advantaged health care funding. If you have a qualified high-deductible health plan (HDHP), you can contribute to an HSA. It can grow tax-deferred similar to an IRA. An HDHP isn’t required for you to contribute to an FSA. What you don’t use by year end, you lose, but there are exceptions. An HRA also doesn’t require an HDHP, but only your employer can contribute. Any unused portion typically is carried forward. Questions about taxes and health care expenses? Contact us.

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Consider the tax advantages of investing in qualified small business stock

 

Investing in qualified small business (QSB) stock offers some attractive tax advantages, especially considering that the TCJA didn’t cut long-term capital gains rates: If you buy QSB stock in 2018 and hold it beyond the 5-year mark in 2023, you can enjoy 100% exclusion of gain when you sell it. If you don’t want to hold the stock that long but within 60 days of selling it you buy other QSB stock with the proceeds, you can defer tax on the gain until you sell the new stock. Contact us for more about the various rules that apply and other important considerations. 

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The tax impact of the TCJA on estate planning

 

The massive changes the TCJA made to income taxes have garnered the most attention. But the new law also made major changes to gift and estate taxes. While the TCJA didn’t repeal these taxes, it did significantly reduce the number of taxpayers who’ll be subject to them by more than doubling the gift and estate tax exemption. Yet factoring taxes into your estate planning is still important. First, the higher exemptions are only temporary. Second, you still may face state estate tax. Third, tax-smart estate planning can reduce income tax. Questions? Contact us. 

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