Hot housing market has fueled economic expansion—and inequality
CoreLogic report examined how overall economy has been tied to turnaround in housing market. CoreLogic HPI Forecast expects a moderate, 5.6 percent acceleration in annual home price growth from June 2019 to June 2020. According to Molly Boesel, CoreLogic’s principal economist, there’s even enough value in homes to help homeowners weather the next downturn. Now, it just appears to be a question of helping more Americans take advantage of a much healthier market.
The “nanny tax” must be paid for more than just nannies
You may have heard of the “nanny tax.” But even if you don’t employ a nanny, it may apply to you. Hiring a housekeeper or other household employee (who isn’t an independent contractor) may make you liable for federal income tax, Social Security and Medicare (FICA) tax and federal unemployment tax. You may also have state tax obligations. In 2019, you must withhold and pay FICA taxes if your worker earns cash wages of $2,100 or more. You pay household worker obligations by increasing your quarterly estimated tax payments or increasing withholding from wages, rather than making a lump-sum payment. Employment taxes are then reported on your tax return. Contact us for assistance.
Businesses can utilize the same information IRS auditors use to examine tax returns
The IRS uses Audit Techniques Guides (ATGs) to help IRS examiners get ready for audits. Your business can use the same guides to gain insight into what the IRS is looking for in terms of compliance with tax laws and regulations. Many ATGs target specific industries, such as construction, aerospace, art galleries, child care providers and veterinary medicine. Others address issues that frequently arise in audits, such as executive compensation and passive activity losses. ATGs allow auditors to uncover unique industry issues, common areas of noncompliance, customary business practices and terminology. For a complete list of ATGs, visit the IRS website here: https://bit.ly/2rh7umD
Run your strategic-planning meetings like they really matter
Many businesses struggle to turn abstract strategic planning ideas into concrete, actionable plans. One reason is simple: ineffective meetings. A good way to get started running better ones is to involve everyone in the agenda-setting process. Also, encourage meeting leaders to speak with conviction and express positivity (if not passion) for the subject matter. To prevent “meeting fatigue,” keep gatherings short and consider having participants break out into smaller groups. One final idea: Tell a story that will grab attendees’ attention and inspire them to come up with creative, feasible ideas.
The 1-2-3 of B2B marketing
It’s critical to recognize the differences between marketing to the public (or certain segments thereof) and business-to-business (B2B) marketing. Whereas wide-scale marketing campaigns need to be simple, concise and catchy, effective B2B campaigns are typically more detailed, complex and substantive. Tell and show customers and prospects how you’ll solve their problems in areas such as productivity, quality, time and costs. Provide plenty of specifics on how you’ll do so, speaking their language. Last, get to know the real people who make the buying decisions at your targeted accounts. Contact us for help
Summer: A good time to review your investments
It’s a good time to review your portfolio for tax-saving strategies. The long-term capital gains tax rate is still historically low on appreciated securities that have been held for more than 12 months. The federal income tax rate on long-term capital gains recognized in 2019 is 15% for most taxpayers. However, the top rate of 20% plus the 3.8% net investment income tax (NIIT) can apply at higher income levels. For 2019, the 20% rate applies to single taxpayers with taxable income exceeding $425,800 ($479,000 for joint filers and $452,400 for heads of households). Contact us to learn how to grow your investments by minimizing the amount of tax you must pay on profits.
It’s a good time to buy business equipment and other depreciable property
The Section 179 deduction has long provided a tax windfall to businesses, enabling them to claim immediate deductions for qualified assets, instead of depreciating them over time. For 2019, the maximum deduction is $1.02 million, subject to a phaseout rule if more than $2.55 million of eligible property is placed in service during the tax year. Even better, the Sec. 179 deduction isn’t the only avenue for immediate tax write-offs for assets such as machinery and equipment. Under the 100% bonus depreciation tax break, the entire cost of eligible assets placed in service in 2019 can be written off this year. Contact us to learn how your business can maximize the deductions.
Volunteering for charity: Do you get a tax break?
Are you a volunteer who works for charity? You may be entitled to some tax breaks if you itemize deductions on your tax return. Unfortunately, they may not amount to as much as you think your generosity is worth. Because donations to charity of cash or property generally are tax deductible for itemizers, it may seem like donations of something more valuable for many people — their time — would also be deductible. However, no tax deduction is allowed for the value of time you spend volunteering or the services you perform for a charitable organization. However, you potentially can deduct out-of-pocket costs associated with your volunteer work. Many rules apply, so contact us with questions.
Is your accounting software living up to the hype?
Accounting software sells itself as being much more than a simple spreadsheet or ledger. Is your system living up to the hype? If not, make sure you’re taking advantage of its full functionality. An on-staff champion may be able to share his or her knowledge, or you could engage a consultant to retrain employees. Also, encourage staffers to point out labor-intensive steps that could be better automated or inconsequential processes that might be eliminated. Last, periodically review critical documents yourself for errors or anomalies that could be traced back to misuse of your software. Contact us for help.
M&A transactions: Avoid surprises from the IRS
If you’re in the process of a merger or acquisition, it’s important that both parties report the transaction to the IRS in the same way. Otherwise, you could increase your chances of being audited. If a sale involves business assets (as opposed to stock or ownership interests), the buyer and the seller must generally report the purchase price allocations that both use for specific assets. This is done by attaching IRS Form 8594 to each of their federal income tax returns. Both parties use the same allocations. Consider requiring this in your asset purchase agreement at the time of the sale. To lock in the best postacquisition results, consult with us before finalizing any transaction.