Employers: The Social Security wage base is increasing in 2022
The Social Security Administration recently announced that the wage base for computing Social Security tax will increase to $147,000 for 2022 (up from $142,800 for 2021). Wages and self-employment income above this threshold aren’t subject to Social Security tax. The Federal Insurance Contributions Act imposes two taxes on employers, employees and self-employed workers. One is for Social Security tax, and the other for Medicare tax. There’s a maximum amount of compensation subject to the Social Security tax, but no maximum for Medicare tax. For 2022, the FICA tax rate for employers is 7.65% — 6.2% for Social Security and 1.45% for Medicare (the same as in 2021).
Engaging in customer-focused strategic planning
For small to midsize businesses, focusing strategic planning on customers may be the most direct route to a better bottom line. First, pick a period (perhaps one, three or five years) and calculate the profitability contribution level of each major customer or customer unit. Next, divide customers or customer units into three groups: 1) an A group of the most profitable buyers, 2) a B group of positive contributors, and 3) a C group of unprofitable customers. Finally, develop a customer-focused strategic plan that nurtures relationships with the A group, increases the potential of the B group, and potentially starts moving on from members of the C group. Contact us for help.
You may owe “nanny tax” even if you don’t have a nanny
Have you heard of the “nanny tax?” Even if you don’t employ a nanny, it may apply to you. Hiring a house cleaner 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 2021, you must withhold and pay FICA taxes if your worker earns cash wages of $2,300 or more ($2,400 in 2022). 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. Questions? Contact us.
Get your piece of the depreciation pie now with a cost segregation study
If your business is depreciating over a 30-year period the entire cost of constructing the building that houses your operation, you should consider a cost segregation study. It might allow you to accelerate depreciation deductions on certain items, which can reduce taxes and boost cash flow. Under current law, the potential benefits are now even better than they were in the past due to enhancements to certain depreciation tax breaks. You may even be able to get the benefit of speedier depreciation for items that were incorrectly claimed. Cost segregation studies can yield substantial benefits, but they’re not right for all businesses. Contact us to find out whether this would be worthwhile.
4 ways to refine your cash flow forecasting
For business owners, being able to accurately forecast cash flow is a mission critical activity. Fortunately, there are ways to refine your approach. First, track your peak sales and production times over as long a period as possible. Know your busy season! Also, engage in careful accounting to anticipate and capture every expense and incoming payment. Note the timing of cash inflows and outflows as well. Keep a careful eye on additional funding sources, such as a line of credit or federally funded small business loan (if you qualify). Above all, stay on top of collections and always be on the lookout for ways to run leaner. Contact us for help with cash-flow forecasting.
Vacation home: How is your tax bill affected if you rent it out?
If you own a vacation home, you may want to rent it out for part of the year. The tax treatment can be complex. It depends on how many days it’s rented and your level of personal use. Personal use includes vacation use by you, certain relatives and nonrelatives if market rent isn’t charged. However, if you rent the property out for less than 15 days during the year, it’s not treated as “rental property” at all. This can produce revenue and significant tax benefits. Any rent you receive isn’t included in your income for tax purposes. However, you can only deduct property taxes and mortgage interest (no other operating costs or depreciation). Contact us to help plan for the best tax results.
New per diem business travel rates became effective on October 1
Are your company’s employees traveling after months of virtual meetings? The IRS announced the fiscal 2022 “per diem” rates that became effective Oct. 1, 2021. You can use these rates to substantiate the amount of expenses for lodging, meals and incidental expenses when traveling. It’s a simplified alternative to tracking actual business travel expenses. The per diem amounts are based on rates set by the IRS that vary depending on locality. After Sept. 30, 2021, the per diem rate for high-cost areas in the continental U.S. is $296. For other areas, the per diem rate is $202. Some high-cost rates are only available part of the year in certain areas. To see all rates: http://bit.ly/3DYdqVE
Remind your sales team about the power of storytelling
Everyone loves a story. It’s why movies are still big business and many of us spend hours on the couch binge-watching our favorite television shows. What’s important to keep in mind — and to remind your sales team — is that effective storytelling can also drive sales. This doesn’t mean devising fanciful, fictional tales to […]
Navigating the tax landscape when donating works of art to charity
If you own a valuable piece of art, or other property, you may wonder how much of a tax deduction you could get by donating it to charity. The answer to that question can be complex because several different tax rules may come into play with such contributions. A charitable contribution of a work of […]
2021 Q4 tax calendar: Key deadlines for businesses and other employers
Here are some of the key tax-related deadlines affecting businesses and other employers during the fourth quarter of 2021. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements. Note: […]
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