Adopting a child? Bring home tax savings with your bundle of joy
If you’re adopting a child, or you adopted one this year, there may be significant tax benefits available to offset the expenses. For 2019, adoptive parents may be able to claim a nonrefundable credit against their federal tax for up to $14,080 of “qualified adoption expenses” for each adopted child. (This amount is increasing to $14,300 for 2020.) The credit allowable for 2019 is phased out for taxpayers with adjusted gross income (AGI) of $211,160 ($214,520 for 2020). It is eliminated when AGI reaches $251,160 for 2019 ($254,520 for 2020). We can help ensure that you meet all the requirements to get the full benefit of the tax savings available to adoptive parents.
3 last-minute tips that may help trim your tax bill
You may still have time to reduce your federal tax liability by taking certain steps. For example, contribute the maximum to your retirement plans by year end, including traditional IRAs and SEP plans. Another idea: If you make your Jan. 2020 payment this month, you can deduct the interest portion on your 2019 tax return (assuming you itemize deductions on your tax return). You can also “harvest” any investment losses by Dec. 31. If you have more losses than gains, you generally can apply up to $3,000 of the excess to reduce your ordinary income. Any remaining losses are carried forward to future tax years. Contact us if you want to discuss ways to minimize your 2019 tax liability.
What’s the right device policy for your company?
Device policies pertaining to smartphones and other technology tools are evolving. Loose “bring your own device” (BYOD) policies are giving way to stricter “choose your own device” (CYOD) or “corporate-owned, personally enabled” (COPE) policies. A CYOD policy lets employees buy a device for combined personal/work use from a company-approved list. Generally, the employee owns the device while the business owns the SIM card and any proprietary data. Under a COPE policy, the employer buys and owns the device, which is intended for business use. The cost is higher, but it comes with greater control. We can help you analyze the potential costs of a device policy and make the right choice.
2020 Q1 tax calendar: Key deadlines for businesses and other employers
Here are a few key tax-related deadlines for businesses during Q1 of 2020. JAN. 31: File 2019 Forms W-2 with the Social Security Administration and provide copies to employees. Also provide copies of 2019 Forms 1099-MISC to recipients and, if reporting nonemployee compensation in Box 7, file, too. FEB. 28: File 2019 Forms 1099-MISC if not required earlier and paper filing. MAR. 16: If a calendar-year partnership or S corp., file or extend your 2019 tax return. Contact us to learn more about filing requirements and ensure you’re meeting all applicable deadlines.
Look in the mirror and identify your company culture
People are paying more attention to company culture when deciding whether to buy from a business or involve themselves with it. Two University of Michigan professors developed the Organizational Culture Assessment Instrument, which defines four common business cultures: 1) Clan; a close, family-like culture typical to start-ups and small businesses, 2) Adhocracy; a dynamic, creative culture focused on innovation, 3) Market; a results-driven, competitive culture bent on domination, and 4) Hierarchy; a formal, structured culture that values process-following and stability. Which one are you? Bear in mind that most businesses exhibit a mixture of the four styles, with one type dominant.
2 valuable year-end tax-saving tools for your business
Under current law, there are two valuable depreciation-related tools that may help your business reduce its 2019 tax liability. To benefit from the Sec. 179 and bonus depreciation deductions, you must buy eligible machinery, equipment, furniture or other assets and place them into service by the end of the tax year. In other words, you can claim a full deduction for 2019 (up to certain limits) even if you acquire assets and place them in service during the last days of the year. It’s important to note that these deductions may also be used for business vehicles. But, depending on the type of vehicle, additional limits may apply. Please contact us to learn more.
Medical expenses: What it takes to qualify for a tax deduction
Medical services and prescriptions are expensive. You may be able to deduct some expenses on your tax return but the rules make it difficult for many people to qualify. You may be able to time certain medical expenses to your tax advantage. For 2019, the medical expense deduction can only be claimed to the extent unreimbursed costs exceed 10% of your adjusted gross income. You also must itemize deductions. If your total itemized deductions will exceed your standard deduction, moving nonurgent medical procedures and other expenses into 2019 may allow you to exceed the 10% floor. This might include refilling prescriptions, buying eyeglasses, going to the dentist and getting elective surgery.
Bridging the gap between budgeting and risk management
At many companies, a wide gulf exists between budgeting and risk management. There are several general types of threats to assess as you draw up next year’s budget. First, think about competitive risks. You may need to spend more on marketing and advertising to compete against a tough rival, or you could be able to channel more dollars into production if you’re in a strong market position. Also identify compliance risks. How will regulatory rules change next year and what will be the impact on your budget? Last, consider internal risks. Arguably the biggest of these is fraud, but also look into hiring, training and technology costs. Let us help you with the process from start to finish.
What is your taxpayer filing status?
When you file your tax return, you do so with one of five filing statuses. It’s possible that more than one status will apply. The box checked on your return generally depends in part on whether you’re unmarried or married on December 31. Here are the filing statuses: Single, married filing jointly, married filing separately, head of household and qualifying widow(er) with a dependent child. Head of household status can be more favorable than filing as a single person, but special rules apply. You must generally be unmarried, have a qualifying child (or dependent relative) and meet certain rules involving “maintaining a household.” If you have questions about your filing status, contact us.
The tax implications if your business engages in environmental cleanup
If your company needs to “remediate” or clean up environmental contamination, the expenses involved can be tax deductible. Unfortunately, every type of environmental cleanup expense cannot be currently deducted. Some cleanup costs must be capitalized. For example, remediation costs generally have to be capitalized if the remediation adds significantly to the value of the cleaned-up property; prolongs the useful life of the property; or adapts it to a new or different use. In addition to federal tax deductions, there may be state or local tax incentives involved in cleaning up contaminated property. If you have environmental cleanup expenses, we can help maximize the deductions available.