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: […]
Is your business tracking website metrics?
Many people still visit websites to gather knowledge, build trust and place orders. A variety of metrics can tell a business whether its website is attracting good attention and generating revenue. One is page views, which simply indicates that a visitor has loaded the HTML file that represents a given webpage. Another useful metric is unique visitors. It identifies everyone who comes to your website, counting each visitor only once regardless of how many times someone visits. Bounce rate is also critical. It indicates when a visitor quickly decides to leave your website without performing any meaningful action. Contact us for help managing your company’s technology costs.
The tax score of winning
Studies find that more people are gambling online and sports betting. And there are still more traditional ways to gamble. If you’re lucky enough to win, tax consequences go along with your good fortune. You must report 100% of your winnings as taxable income. If you itemize deductions, you can deduct losses but only up to the amount of winnings. You report winnings as income in the year you actually receive them. In the case of noncash prizes (such as a car), this would be the year the prize is received. With cash, if you take the winnings in annual installments, you only report each year’s installment as income for that year. These are just the basic rules. Questions? Contact us.
M&A transactions: Be careful when reporting to the IRS
Low interest rates and other factors have caused mergers and acquisitions to reach new highs in 2021. If you’re in the process of a transaction, it’s important that both parties report it to the IRS in the same way. Otherwise, you could be 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 on IRS Form 8594 attached to each of their federal income tax returns. Both parties use the same allocations. Consider requiring this in your asset purchase agreement. To achieve the best tax results, consult with us before finalizing a deal.
EIDL program retooled for still-struggling small businesses
For many small businesses, the grand reopening is still on hold. The rapid spread of the Delta variant of COVID-19 has mired a variety of companies in diminished revenue and serious staffing shortages. In response, the Small Business Administration (SBA) has retooled its Economic Injury Disaster Loan (EIDL) program to offer targeted relief to eligible […]
Is a Health Savings Account right for you?
For eligible individuals, a Health Savings Account (HSA) offers a tax-favorable way to set aside funds (or have an employer do so) to meet future medical needs. Some of the tax benefits: 1) Contributions are deductible, within limits; 2) Earnings on the funds in the HSA aren’t taxed; 3) Contributions an employer makes aren’t taxed to you; and 4) Distributions to cover qualified medical expenses aren’t taxed. An eligible employee must be covered by a “high deductible health plan.” For 2021, a high deductible health plan has an annual deductible of at least $1,400 for self-only coverage or $2,800 for family coverage. An individual can contribute $3,600 ($7,200 for a family) to an HSA for 2021.
Tax depreciation rules for business automobiles
If you use an automobile in your business, you may wonder how depreciation tax deductions are determined. The rules are complicated, and special limits that apply to vehicles classified as passenger autos can make it take longer than expected to fully depreciate a vehicle. First, note that if you use the “standard mileage rate” (56 cents per business mile driven for 2021), a depreciation allowance is built into the rate and you don’t need to worry about the depreciation calculations. But if you choose to use the “actual expense method” to claim deductions on a passenger auto, depreciation is calculated each year based on the car’s cost, how much you use it for business and other factors.
Opening a new location calls for careful planning
Is your business doing well enough for you to consider adding another location? “Fortune favors the bold,” goes the old saying. However, strained cash flow and staffing issues can severely disfavor the underprepared. Ask yourself fundamental questions such as: Will we be able to duplicate the success of our current location? How might expansion affect business at both places? Look at how you’re going to fund the endeavor. Ideally, the first location will generate enough revenue to cover some of the costs, but you may need to take on substantial debt. Consider the tax ramifications as well, such as paying property taxes on two locations. We can help you assess the feasibility of the idea.
Selling a home: Will you owe tax on the profit?
Many people have seen their home values increase recently. Be aware of the tax implications if you sell your home. If you’re selling your principal residence, you can exclude up to $250,000 ($500,000 for joint filers) of gain, if you meet certain requirements. For example, you must have owned the property for at least 2 years during the 5-year period ending on the sale date. If you sell your main home, and you qualify to exclude up to $250,000/$500,000 of gain, the excluded gain isn’t subject to the 3.8% net investment income tax (NIIT). However, gain that exceeds the exclusion limit is subject to the tax if your modified adjusted gross income is over a certain amount. Questions? Contact us.
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