Category: Education Planning Tags: Tax Credit Article Highlights: Sec. 529 plans Coverdell Education Savings Accounts American Opportunity Tax Credit The Lifetime Learning Credit Qualified Education Loan Interest Figuring out how to pay for your child’s trade school or college education can be challenging, and the earlier you create your plan and begin executing it, the greater your chances are of having the needed money set aside to pay for it. The government provides a variety of tax incentives to help defray the cost of education. Some require long-term planning to provide the most benefit, while others provide current tax deductions or credits. The benefits generally apply to both vocational schools and colleges.
Category: Tax Central Tags: Home and Mortgage, Tax Planning Article Highlights: Home Sale Gain Exclusion Home Sale Loss Rule Mortgage Interest Deductions When individuals buy new homes, they often consider turning their old homes into rentals rather than selling them. All too often, that decision is made without considering the tax implications. Converting a former residence into a rental may also happen when two individuals who each own a home get married or when individuals move to a new area but don’t want to sell their former homes. Whatever the reasons, the following tax circumstances should be considered before making that decision. Home Sale Gain Exclusion – When an individual has owned and occupied
Category: For BusinessTags: Growing your Business According to the Tax Foundation, 90% of United States (US)-based businesses are pass-through entities, such as S corporations, partnerships, and sole proprietorships. These businesses employ the majority of the private-sector workforce and provide nearly half of all business income. Income from these entities is passed through to the owner’s individual tax returns. With the change in leadership in Washington, several proposals will most likely change the way in which these entities are taxed, making it more advantageous to be a small business owner. Types of Business Structures A number of pros and cons exist for each type of business structure depending on the
Category: Looking to Invest, Tax CentralTags: Investment, Tax Planning Article Highlights: Zero Capital Gains Rate Offset Gains With Losses Wash Sales If you invest in publicly traded securities, here are a couple of tax-saving possibilities you shouldn’t forget to consider before year-end. Zero Capital Gains Rate – If you are having a low-income year, there may be a way for you to take advantage of it. There is a zero long-term capital gains rate for those taxpayers whose regular tax brackets are 15% or less. This may allow you to sell some appreciated securities that you have owned for more than a year and actually pay no or very
Category: For BusinessTags: Tax Planning, Taxes Article Highlights: Paying Independent Contractors 1099-MISC Reporting Threshold Form W-9 Benefits Penalties Due Date If you use independent contractors in your business and pay them $600 or more during the calendar year, you are required to issue them a 1099-MISC after the close of the year. If you fail to do so, and your (if you operate as a Schedule C sole proprietor) or your business’s income tax return is subsequently audited, you could lose the deduction for those payments and end up paying taxes on that income yourself, not to mention potential penalties. A big tax trap for businesses is the $600
Category: For BusinessTags: Business Expenses, Employee Article Highlights: Reporting employees as independent contractors Not reconciling bank accounts regularly Forgetting to record payments against open invoices Not understanding the differences between cash flow and profit When you decided to open for business, you had a vision for the future. You identified a need and came up with a solution you could provide and sell, and you invested your time, your money, your knowledge, and your drive to make it into a reality. The only problem in this scenario, if you’re like a lot of small business owners, is that you did not anticipate having to handle your business’s accounting needs.
Category: For Business, Health Care ReformTags: Insurance, Medical Article Highlights: Under the 50-Employee Threshold Determining the 50-Employee Threshold Full-Time Employee Equivalent Full-Time Employees Information Return Requirements SHOP Marketplace Small Business Health Care Credit When Congress came up with the Affordable Care Act (ACA), they carved out two basic categories of businesses, those with 50 full-time employees and/or full-time equivalent employees (FTEEs) and those with fewer than 50 employees. Under the ACA, businesses in the first category have a requirement to offer affordable insurance to their full-time employees and their dependents. If you are an employer with fewer than 50 full-time employees or FTEEs, you are not subject to the insurance
Category: For Business, Tax CentralTags: Tax Planning Congress has reached a bipartisan agreement on tax extenders, aptly named “Protecting Americans from Tax Hikes Act of 2015”. Much to everyone’s surprise, some were made permanent while others were only extended for a period of time. Congress also modified several provisions and added new ones to reduce tax fraud. Here is a look at some of the key provisions included in the legislation that pertain to individuals, small businesses, and certain energy-related provisions: INDIVIDUAL PROVISIONS: Child Credit – This credit was made permanent; it provides a $1,000 credit for each dependent child who is under the age of 17 at year’s end,
Category: Education PlanningTags: Tax Planning Article Highlights: Coverdell Education Savings Accounts Qualified State Tuition Programs (Sec 529 plans) Savings Contribution Limits Gift Tax Issues The tax code provides two primary advantageous ways of saving for your children’s education. We frequently get questions about the differences between the programs and about which program is best-suited for a family’s particular needs. The Coverdell Education Savings Account and the Qualified Tuition Plan (frequently referred to as a Sec 529 Plan) are similar; neither provides tax-deductible contributions, but both plans’ earnings are tax-free if used for allowable expenses, such as tuition. Therefore, with either plan, the greatest benefit is derived by making contributions
Category: Retirement Planning Tags: Retirement Article Highlights: Distribution Hazards Trustee-to-Trustee Transfers Rollovers Taxability Withholding Requirements Early Withdrawal Penalty When an individual retires or leaves an employer’s service, the individual will be required to take a distribution from the employer’s retirement plan (if the employer had a plan). Depending on the employee’s age and the plan’s terms, a distribution may not be required immediately, but when it’s time to take the distribution there are a number of tax pitfalls that can create some very big tax headaches for the employee. This article will explore those hazards and discuss how to avoid them. First and foremost, if the employee does not transfer