Tax Talk

Keep current with the latest tax news that affects you and your business.

Paycheck Protection Program Update

At the end of 2020, Congress passed, and President Trump signed, a new law that provides for additional relief related to the coronavirus (COVID-19) pandemic. This law, the Consolidated Appropriations Act, 2021 (CAA, 2021), includes a second draw of Paycheck...

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Tax Issues When A Loved One Passes Away

If a loved one passes away and you serve as the executor or inherit assets, you need to consider your duties and so some tax planning. Filing the Final Form 1040 for Unmarried Decedent If the decedent was unmarried, an initial step is to file his or her final Form...

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Tax-Smart College Savings Strategies for Parents

College is expensive. Data for the 2019–2020 academic year indicates that the average cost of tuition, fees, room, and board was $30,500. The tax law has provisions to help you cover the costs, including Coverdell accounts, Section 529 savings plans, and Section 529...

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The IRS Goes Easy on Taxpayers Who Owe Back Taxes

Are you one of the over 11 million Americans who owe the IRS back taxes? The IRS temporarily suspended most collection efforts during the first wave of the coronavirus pandemic through its “People First Initiative.” This initiative expired July 15, 2020. The IRS is...

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Four Things to Know When Hiring Your Spouse

If you own your own business and operate as a proprietorship or partnership (wherein your spouse is not a partner), one of the smartest tax moves you can make is hiring your spouse to work as your employee. But the tax savings may be a mirage if you don’t pay your...

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Good News If Your PPP Loan Is for $50,000 or Less

As you likely know by now, the Paycheck Protection Program (PPP) loan and its forgiveness process have been an ever-changing (and often confusing) ride so far.With the new rules for PPP loans of $50,000 or less, you escape the most difficult part of the loan...

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2020 Last-Minute Year-End Medical Plan Strategies

All small-business owners with one to 49 employees should have a medical plan in their business. Sure, the tax law does not require you to have a plan, but you should. Most of the tax rules that apply to medical plans are straightforward when you have fewer than 50...

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2020 Last-Minute Stock Portfolio Tax Strategies

When you take advantage of the tax code’s offset game, your stock market portfolio can represent a little gold mine of opportunities to reduce your 2020 income taxes. The tax code contains the basic rules for this game, and once you know the rules, you can apply the...

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Last-Minute Section 199A Tax Reduction Strategies for 2020

Remember to consider your Section 199A deduction in your year-end tax planning.  If you don’t, you could end up with a big fat $0 for your deduction amount. We’ll review three year-end moves that (a) reduce your income taxes and (b) boost your Section 199A deduction...

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Should You Defer Federal Payroll Taxes?

If you have employees, you must withhold their 6.2 percent share of the Social Security tax from their wages up to an annual wage ceiling ($137,700 for 2020). You must pay the money to the IRS along with your matching 6.2 percent employer share of the tax. But under...

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Cash Based Small Business Year End Tax Tips for 2020

The purpose of this letter is to get the IRS to owe you money. Of course, the IRS is not likely to cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you pay less in taxes. Here are six powerful...

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Home Office Deductions During Pandemic

Using Whole or Partial Rooms for Your Home Office With the COVID-19 pandemic still going on, you may be spending more time working from your home office for your business (not applicable for an employee).You may have taken some extra rooms for your business use. Is...

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S Corporation Salary Guidelines

You likely formed an S corporation to save on self-employment taxes. If so, is your S corporation salary nonexistent? too low? too high? just right? Getting the S corporation salary right is important. First, if it’s too low and you get caught by the IRS, you will pay...

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Using Your Personal Car in Your Business

Using Your Personal Car in Your Business Do you operate your business as an S or a C corporation? Do you drive a vehicle titled in your personal name for corporate business? Beware. The Tax Cuts and Jobs Act (TCJA) changed the rules for tax years 2018-2025. Before the...

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Year-End Tax Planning for 2020

2020 has been quite a challenge, to say the least. The COVID-19 crisis brought massive unemployment, business closures, and an enormous amount of uncertainty. All of this has made 2020 seem like the year that never ends. In fact, I’m sure some of us can’t wait for it...

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Thinking of Moving to a Lower Tax State? Think Again.

If you’re considering moving to a different state, taxes in the new state may be the deciding factor—especially if you expect them to be lower. Consider All Applicable State and Local Taxes If your objective is to move to a lower-tax state, it may seem like a...

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Home Office News for Small Businesses

When possible, you want to claim that your office in your home qualifies as a principal place of business, because this classification gives you the home-office deduction, and eliminates commuting from your home to your regular office. Current law gives you two ways...

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Self-Employed with No Employees? Get Your COVID-19 Cash Now

Get ready for this: “I’m from the government, and I’m here to help.” Here’s the deal: “I’m going to give you $20,833 today. I want you to give me $5,448 no later than two years from now. You can keep the $15,385 difference, tax-free—no strings.” It’s true. The lucky...

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NOLS and QIPS

Net Operating Losses For many years, thanks to the net operating loss (NOL) provisions, the tax code gave you quick cash in your pocket if you had an overall net loss in a tax year. Unfortunately, starting in 2018, the Tax Cuts and Jobs Act (TCJA) took away your...

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Payroll & Self Employment Tax Relief

If you are in business for yourself—say, as a corporation or self-employed—payroll taxes and self-employment taxes are likely two of your biggest tax burdens. Here’s some possible good news: Congress decided to give you significant relief from these taxes due to the...

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AB 5: Independent Contractors Update

In 2019, the Governor signed AB 5. Under AB 5, most workers are presumed to be employees for purposes of the Labor Code, the Unemployment Insurance Code, and for most wage orders of the Industrial Welfare Commission unless a hiring entity satisfies a three-factor...

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Charitable Donations for Business Owners

Giving to your church, school, or other 501(c)(3) charity is a noble act no matter how you choose to give. But for the purposes of tax savings, some forms of giving are much more beneficial to you than others. As a business owner, you can use some business strategies...

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Important Tax Breaks from the CARES Act

Congress just passed the CARES Act in response to the COVID-19 pandemic. In it, there are a lot of juicy tax benefits for you and your business. We’ll tell you about a collection of important ones you need to know and will explain other provisions in future e-mails....

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COVID-19 Quick Facts

Will I receive cash from the government? If so, when? Single individuals with 2019 (2018, if your 2019 return hasn’t been filed yet) Adjusted Gross Income (AGI) up to $75,000 ($112,500 if you file as “head of household”) will generally receive a $1,200 rebate from the...

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New SBA Loans For Small Businesses Explained

At long last, I have received enough editorial information to start making some sense out of the flurry of new laws being passed. The COVID-19 pandemic has upended all aspects of life around the world, including the world of business here in the U.S.  If your business...

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PPP Loan Forgiveness for S-Corporations

Tax law definitions do not apply to much of the PPP, making it new ground for owners of S corporations. Here are answers to four questions of concern to many S corporation owners. 1. Spouse Owns S Corporation Question. My wife owns 100 percent of the S corporation as...

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Mid-Year Tax Planning for 2020

This most recent tax season was unlike any we’ve ever experienced. With the spring deadline postponed until July 15, we’re still busy preparing returns. While it may seem odd to discuss 2020 midyear planning while you’re still waiting to file your 2019 tax return,...

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All About Limited Liability Companies

Limited liability companies (LLCs) are a popular choice of entity for small businesses and investment activities. LLC owners are called members. Single-member LLCs have one owner, although spouses who jointly own an LLC in a community property state can elect...

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PPP Loan Forgiveness Q & A

If you report your business income and expenses on Schedule C of your Form 1040, your Payroll Protection Program (PPP) loan forgiveness is straightforward, as you see in the four answers below. 1. Paying Myself Question. I know that I can achieve full forgiveness...

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Creating More Business Meal Tax Deductions After the TCJA

Here’s good news for business meals: the Tax Cuts and Jobs Act (TCJA) removed the “directly related and associated with” requirements from business meals. The net effect of this change is to subject business meals once again to the pre-1963 “ordinary and necessary”...

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Beware: IRS Error in Rental Property Deduction Publication

Beware: IRS Error in Rental Property Deduction Publication Here’s a heads-up on mortgage insurance. Personal Residence Mortgage Insurance The deduction for mortgage insurance on a qualified residence ended on December 31, 2017. But don’t give up on the deduction. The...

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Roth IRA versus Traditional IRA: Which Is Better for You?

Roth IRA versus Traditional IRA: Which Is Better for You? Roth IRAs tend to get a lot of hype, and for good reason: because you pay the taxes up front, your eventual withdrawals (assuming you meet the age and holding-period requirements—more on these below) are...

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Employee Expense Reimbursement Plans are Essential

THE NEED FOR AN ACCOUNTABLE PLAN Failure to use an accountable plan for your employee expense reimbursements (including yourself if you operate as a corporation) turns those improperly reimbursed expenses into taxable wages. In other words, by failing to comply with...

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Most Rentals Likely Qualify as Section 199A Businesses

The Tax Cuts and Jobs Act tax reform added new tax code Section 199A, which created a 20 percent tax deduction possibility for you if your rental property (a) has profits and (b) can qualify as a trade or business. As the law now stands, with rentals that achieve...

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Renting Out a Vacation Home

RENTING A VACATION HOME You must consider the vacation home rules when you rent a bedroom in your home and also use it personally, or rent your beach home (or any other home you own) and also use it personally. Personal Use of the Dwelling Rent or use by relatives....

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Section 199A Deduction Benefits

Maximizing the 199A Deduction If you are self-employed, or have income from rental properties, an S corporation or partnership, remember to consider your Section 199A deduction in your year-end tax planning. If you don’t, you could end up with a big fat $0 for your...

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Deducting Medicare for Business Owners

Premiums for Medicare health insurance can add up to a substantial sum. That’s especially true if you have high income, and you’re married and both you and your spouse are paying premiums. Fortunately, the premiums can potentially help your tax situation. The dollar...

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Converting Your Home to a Rental Property

Thinking of converting your home to a rental property? The process is pretty simple, but brings with it many tax rules, mostly good when you know how they work. The first question that arises when you convert a personal residence into a rental is how to determine the...

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Kiddie Tax Blues

If your family has trouble with the kiddie tax, you face some new wrinkles for tax years 2018 through 2025 thanks to the Tax Cuts and Jobs Act (TCJA) tax reform. This is one of the many areas where tax planning can pay off. For 2018–2025, the TCJA tax reform changes...

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Business Reasons for Charitable Giving

Giving to your church, school, or other 501(c)(3) charity is a noble act no matter how you choose to give. But for the purposes of tax savings, some forms of giving are much more beneficial to you than others. As a business owner, you can use some business strategies...

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Age-Related Tax And Financial Planning Milestones

In an era filled with uncertainty, you can count on one thing: time marches on! This letter covers some important age-related tax and financial planning milestones that you should keep in mind for yourself and loved ones. Ages 0–23 The so-called “Kiddie Tax” rules can...

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AB 5 Rule Changes to Employees/Contractors

AB 5 Independent contractors In 2019, the Governor signed AB 5. Under AB 5, most workers are presumed to be employees for purposes of the Labor Code, the Unemployment Insurance Code, and for most wage orders of the Industrial Welfare Commission unless a hiring entity...

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Choosing the Right Plan is Key to Retirement Security

If you’re a small business owner or you’re involved in a start-up, you may want to set up a tax-favored retirement plan for yourself and any employees. Several types of plans are eligible for tax advantages.401(k) planOne of the best-known retirement plan options is...

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A Company Car and Your Taxes

The use of a company vehicle is a valuable fringe benefit for owners and employees of small businesses. This benefit results in tax deductions for the employer as well as tax breaks for the owners and employees using the cars. (And of course, they get the nontax...

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S Corporation Status – Is this Right for Your Business?

Operating a business as an S corporation may provide many advantages, including limited liability for owners and no double taxation (at least at the federal level). Self-employed people may also be able to lower their exposure to Social Security and Medicare taxes if...

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Now is the Time to Buy Business Equipment or Property

  There’s good news about the Section 179 depreciation deduction for business property. The election has long provided a tax windfall to businesses, enabling them to claim immediate deductions for qualified assets, instead of taking depreciation deductions over...

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Combining Business & Personal Travel: The Tax Smart Way

  Summer is just around the corner, so you might be thinking about getting some vacation time. If you’re self-employed or a business owner, you have a golden opportunity to combine a business trip with a few extra days of vacation and offset some of the cost with...

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Should My Business Become a C Corporation?

The Tax Cuts and Jobs Act (TCJA) has changed the landscape for business taxpayers. That’s because the law introduced a flat 21% federal income tax rate for C corporations. Under prior law, profitable C corporations paid up to 35%.The TCJA also cut individual income...

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Expenses Businesses Can’t Write Off

If you read the Internal Revenue Code (and you probably don’t want to!), you may be surprised to find that most business deductions aren’t specifically listed. It doesn’t explicitly state that you can deduct office supplies and certain other expenses.Some expenses are...

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Changes to Business Meal Deductions Under Today’s Tax Laws

In the course of operating your business, you probably spend time and money “wining and dining” current or potential customers, vendors and employees. What can you deduct on your tax return for these expenses? The rules changed under the Tax Cuts and Jobs Act (TCJA),...

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Tax Implications When Business Owners Divorce

If you’re getting a divorce, you know it’s a highly stressful time. But if you’re a business owner, tax issues can complicate matters even more. Your business ownership interest is one of your biggest personal assets and your marital property will include all or part...

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M&A Transactions and How They Affect Taxes

Merger and acquisition activity has been brisk in recent years. If your business is considering merging with or acquiring another business, it’s important to understand how the transaction will be taxed under current law.Stocks vs. AssetsFrom a tax standpoint, a...

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When are LLC members subject to self-employment tax?

Limited liability company (LLC) members commonly claim that their distributive shares of LLC income — after deducting compensation for services in the form of guaranteed payments — aren’t subject to self-employment (SE) tax. But the IRS has been cracking down on LLC...

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Tax Identity Theft is a Growing Problem for Businesses

Tax identity theft may seem like a problem only for individual taxpayers. But, according to the IRS, increasingly businesses are also becoming victims. And identity thieves have become more sophisticated, knowing filing practices, the tax code and the best ways to get...

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Reducing Your Tax Risk When Using Independent Contractors

Classifying a worker as an independent contractor frees a business from payroll tax liability and allows it to forgo providing overtime pay, unemployment compensation and other employee benefits. It also frees the business from responsibility for withholding income...

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Assessing the S Corp

The S corporation business structure offers many advantages, including limited liability for owners and no double taxation (at least at the federal level). But not all businesses are eligible • and, with the new 21% flat income tax rate that now applies to C...

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Choosing the Right Accounting Method for Tax Purposes

The Tax Cuts and Jobs Act (TCJA) liberalized the eligibility rules for using the cash method of accounting, making this method — which is simpler than the accrual method — available to more businesses. Now the IRS has provided procedures a small business taxpayer can...

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Documentation for Business Deductions is a Must

Meal, vehicle and travel expenses are common business deductions. But if you don’t properly document these expenses, you could find your deductions denied by the IRS. A Critical Requirement Subject to various rules and limits, business meal (generally 50%), vehicle...

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The New QBI Deduction’s Wage Limit Explained

The Tax Cuts and Jobs Act (TCJA) provides a valuable new tax break to noncorporate owners of pass-through entities: a deduction for a portion of qualified business income (QBI). The deduction generally applies to income from sole proprietorships, partnerships, S...

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Avoid Payroll Tax Penalties

  For small businesses, managing payroll and payroll taxes can be one of the most arduous tasks. Adding to the burden earlier this year was adjusting income tax withholding based on the new tables issued by the IRS. (Those tables account for changes under the Tax...

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New Pass-Through Business Loss Deduction Changes Under TCJA

It’s not uncommon for businesses to sometimes generate tax losses. But the losses that can be deducted are limited by tax law in some situations. The Tax Cuts and Jobs Act (TCJA) further restricts the amount of losses that sole proprietors, partners, S corporation...

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Business Gifts – Bypassing the $25 Deduction Limit

  At this time of year, it’s common for businesses to make thank-you gifts to customers, clients, employees and other business entities and associates. Unfortunately, the tax rules limit the deduction for business gifts to $25 per person per year, a limitation...

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Thinking of Buying a Business? Tax Planning is Crucial

If you acquire a company, your to-do list will be long, which means you can’t devote all of your time to the deal’s potential tax implications. However, if you neglect tax issues during the negotiation process, the negative consequences can be serious. To improve the...

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6 Ways to Control Your Unemployment Tax Costs

  Unemployment tax rates for employers vary from state to state. Your unemployment tax bill may be influenced by the number of former employees who’ve filed unemployment claims with the state, your current number of employees and your business’s age. Typically,...

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Business Get Tax and Other Benefits from ESOPs

With an employee stock ownership plan (ESOP), employee participants take part ownership of the business through a retirement savings arrangement. Meanwhile, the business and its existing owner(s) can benefit from some potential tax breaks, an extra-motivated workforce...

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Three Charitable Donations Businesses May Not be Aware Of

  Donating to charity is more than good business citizenship; it can also save you on your taxes. Here are three lesser-known federal income tax breaks for charitable donations by businesses. Food Donations Charitable write-offs for donated food (such as by...

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Reimbursing Employee Travel Expenses – Your Options

If your employees incur work-related travel expenses, you can better attract and retain the best talent by reimbursing these expenses. But to secure tax-advantaged treatment for your business and your employees, it’s critical to comply with IRS rules. Reasons to...

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I Got Excited

  I love helping people arrange their affairs to save taxes.  Recently, I had the opportunity to review the tax returns for a self-employed individual (H) and his wife (W).  H was reporting net business income on his Schedule C of around $90,000 and had wage...

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Hiring Your Children as a Tax Strategy

It can be difficult in the current job market for students and recent graduates to find summer or full-time jobs. If you’re a business owner with children in this situation, you may be able to provide them with valuable experience and income while generating tax...

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Calendar Tax Year or Fiscal Tax Year? Which is Right for You

Many business owners use a calendar year as their company’s tax year. It’s intuitive and aligns with most owners’ personal returns, making it about as simple as anything involving taxes can be. But for some businesses, choosing a fiscal tax year can make more sense....

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C corp.’s Buy-Sell Agreements May Have Tax Implications

Private companies with more than one owner should have a buy-sell agreement to spell out how ownership shares will change hands should an owner depart. For businesses structured as C corporations, the agreements also have significant tax implications that are...

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Bartering Transactions May Come with Tax Liabilities

Bartering might seem like something that happened only in ancient times, but the practice is still common today. And the general definition remains the same: the exchange of goods and services without the exchange of money. Because no cash changes hands in a typical...

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Tax Benefits of Reimbursing Employees’ Education Expenses

Reimbursing employees for education expenses can both strengthen the capabilities of your staff and help you retain them. In addition, you and your employees may be able to save valuable tax dollars. But you have to follow IRS rules. Here are a couple of options for...

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The ACA and Your Business Taxes: A Refresher

The bill to repeal and replace the Affordable Care Act (ACA) has been withdrawn and it’s uncertain whether there will be any other health care reform legislation this year. We thought this would be a good time to review some of the tax-related ACA provisions affecting...

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2017 Q2 Tax Deadline Calendar

  Here are some of the key tax-related deadlines affecting businesses and other employers during the second quarter of 2017. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. April 18 If a calendar-year C...

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Are You a Business or Is This A Hobby?

If you run a business “on the side” and derive most of your income from another source (whether from another business you own, employment or investments), you may face a peculiar risk: Under certain circumstances, this on-the-side business might not be a business at...

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Deducting Mileage – Not Just for Businesses!

  Rather than keeping track of the actual cost of operating a vehicle, employees and self-employed taxpayers can use a standard mileage rate to compute their deduction related to using a vehicle for business. But you might also be able to deduct miles driven for...

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Tax Treatment of ISOs – Information You Need

Incentive stock options allow you to buy company stock in the future at a fixed price equal to or greater than the stock’s fair market value on the grant date. If the stock appreciates, you can buy shares at a price below what they’re then trading for. However,...

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Some Taxpayers Benefit from State and Local Deductions

The break allowing taxpayers to take an itemized deduction for state and local sales taxes in lieu of state and local income taxes was made “permanent” a little over a year ago. This break can be valuable to those residing in states with no or low income taxes or who...

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Filing Your Taxes Early Can Help Prevent Identity Theft

If you’re like many Americans, you might not start thinking about filing your tax return until close to this year’s April 18 deadline. You might even want to file for an extension so you don’t have to send your return to the IRS until October 16. But there’s another...

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It’s Not Too Late to Create a Retirement Plan for 2016

Saving for retirement can be tough if you’re putting most of your money and time into operating a small business. However, many retirement plans aren’t difficult to set up. Plus, setting up a plan for savings is important – not to mention allows for tax savings. So if...

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The President-elect’s Proposed Tax Plan for Businesses

The election of Donald Trump as President of the United States could result in major tax law changes in 2017. Proposed changes spelled out in Trump’s tax reform plan released earlier this year that would affect businesses include: Reducing the top corporate income tax...

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Give Appreciated Stock: 1 Donation = 2 Tax Benefits

When looking at your overall tax planning strategy, making donations to charity is a great way to not only help a great cause, but also get a tax break for your efforts. If you’re inclined to give cash, you should first consider another option that provides two tax benefits: Donating appreciated stock that you have held on to for at least a year.

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