Some taxpayers qualify for more favorable “head of household” tax filing status
When preparing your tax return, we’ll check one of the following statuses: Single, married filing jointly, married filing separately, head of household (HOH) or qualifying widow(er). Filing as HOH is more favorable than filing as single. For example, the 2023 HOH standard deduction is $20,800 while it’s $13,850 for singles. To be eligible, you must maintain a household, which for more than half the year, is the principal home of a “qualifying child” or other relative of yours whom you can claim as a dependent. You’re considered to maintain a household if you live in the home for the tax year and pay over half the cost of running it. We can answer any questions you have about your situation.
How businesses can use stress testing to improve risk management
If you’ve been following the news, you’re probably aware of the sudden rise in concern about the banking industry. One way that banks are advised to guard against catastrophic failure is to regularly perform “stress testing.” This entails using analytical techniques to ascertain whether and how the institution would be affected by specified events. Businesses can use this approach, too. First, identify specific risks of four major types: operational, financial, compliance and strategic. Next, meet with your leadership team to improve your collective understanding of the threats, including the financial impact. Finally, develop a game plan to mitigate each risk. Contact us for help.
The tax rules for donating artwork to charity
If you’re an art collector, you may wonder about the tax breaks available for donating a work of art to charity. Several different tax rules may come into play. Your deduction for a charitable contribution of art is subject to be reduced if the charity’s use of it is unrelated to the purpose or function that’s the basis for its qualification as a tax-exempt organization. The reduction equals the amount of capital gain you would have realized had you sold the property instead of giving it to charity. There are also substantiation rules that depend on the amount of a deduction and other rules may apply. Contact us for guidance on large charitable gifts. We can help ensure the best tax outcome.
It’s happening: Using social media for customer service
Whether many businesses realize it or not, customer service happens on social media. And perhaps the worst thing you can do is leave it to chance. You and your leadership team should make a conscious decision about whether to offer customer service on social media. If you do, you’ll need to determine what level of service to provide and on which platform (Facebook, Twitter, etc.) to provide it. Establish a social media policy that covers items such as appropriate tone and language, standard responses to FAQs and when to escalate issues to private interactions. You may even want to set up a dedicated account for customer service. Contact us for help evaluating the costs involved.
Beware of Scammers
The IRS urges taxpayers and tax professionals to remain vigilant in the face of emails and text scams aimed at tricking people about refunds or tax issues in the second of the 2023 Dirty Dozen tax scams. These messages arrive in the form of unsolicited texts or emails which try to lure unsuspecting victims into […]
Two important tax deadlines are coming up — and they don’t involve filing your 2022 tax return
April 18 is the deadline for filing your 2022 tax return. But a couple other tax deadlines are coming up and they’re important for certain taxpayers: 1) April 1 is the last day to begin receiving required minimum distributions (RMDs) from IRAs, 401(k)s and similar workplace plans for taxpayers who turned 72 during 2022. 2) April 18 is the deadline for making the first 2023 quarterly estimated tax payment, if you’re required to make one. You may have to make estimated payments if you receive interest, dividends, self-employment income, capital gains or other income. Contact us if you have questions about RMDs and estimated tax payments. We can help you stay on track and avoid penalties.
2023 Q2 tax calendar: Key deadlines for businesses and employers
Here are some key tax deadlines for businesses during the second quarter of 2023. APRIL 18: If you’re a calendar-year corporation, file a 2022 income tax return (Form 1120) or file for a six-month extension (Form 7004) and pay any tax due. APRIL 18: Corporations pay the first installment of 2023 estimated income taxes. MAY 1: Employers report income tax withholding and FICA taxes for the first quarter of 2023 (Form 941) and pay any tax due. JUNE 15: Corporations pay the second installment of 2023 estimated income taxes. Contact us to learn more about filing requirements and ensure you meet all applicable deadlines.
Keep an eye out for executive fraud
Your leadership team is likely made up of trustworthy colleagues, but it’s still a good idea to keep an eye out for executive fraud. Forensic accountants use “the fraud triangle” to explain why such fraud occurs: 1) Pressure, the need to maintain a lavish lifestyle or service massive debt. 2) Opportunity, having access and authority to commit fraud. 3) Rationalization, believing that wrongdoing is commonplace or that the business owes the person something. Strong internal controls are imperative to preventing and detecting executive fraud. Also critical are anti-fraud training, reporting measures, and a willingness to investigate and prosecute perpetrators. Contact us for help.
The 2022 gift tax return deadline is coming up soon
Did you make large gifts to your children, grandchildren or other heirs last year? If so, it’s important to determine whether you’re required to file a gift tax return by April 18 (Oct. 16 if you file for an extension). The annual gift tax exclusion has increased in 2023 to $17,000 but was $16,000 for 2022. Generally, you’ll need to file a return if you made 2022 gifts that exceeded the $16,000-per-recipient gift tax annual exclusion (unless to your U.S. noncitizen spouse) and in certain other situations. But sometimes it’s desirable to file a gift tax return even if you aren’t required to. Contact us if you’re not sure whether you must (or should) file a 2022 gift tax return.
Changes in Sec. 174 make it a good time to review the R&E strategy of your business
A provision of the Tax Cuts and Jobs Act that took effect last year was the end of current deductibility for research and experimental (R&E) expenses. The provision affects businesses with significant R&E costs. Starting in 2022, Section 174 R&E expenditures must be capitalized and amortized over five years (15 years for research conducted outside the U.S.). Previously, businesses could opt to deduct these costs immediately as current expenses. For 2022 tax returns, the IRS recently released guidance for taxpayers to change the treatment of R&E expenses. Revenue Procedure 2023-11 provides a way to obtain automatic consent to change methods of accounting for specified Sec. 174 R&E expenses.
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