Are your employees ignoring their 401(k)s?
Employees often grow so accustomed to having a 401(k) that they don’t pay much attention to it. Keeping your employees engaged will help them value this benefit more, which can pay dividends for you in productivity and retention. Remind them that a 401(k) remains one of the most tax-efficient ways to save for retirement. Explain that, if they’re invested appropriately, their accounts will likely rebound from any market volatility. Consider providing outside financial advisors to help employees devise appropriate investment strategies. Contact us for more info.
Careful tax planning required for incentive stock options
Incentive stock options (ISOs) allow you to buy your employer’s stock in the future at a fixed price equal to or greater than the stock’s fair market value on the ISO grant date. If the stock appreciates, you can buy shares at a price below what they’re then trading for. But complex tax rules apply. If you were granted ISOs in 2018, there likely isn’t any impact on your 2018 income tax return. But if in 2018 you exercised ISOs or sold stock you acquired via exercising ISOs, then it could affect your 2018 tax liability. Need help tax planning for ISOs? Contact us.
Beware the Ides of March — if you own a pass-through entity
Pass-through entity owners: Beware the Ides of March. Shakespeare’s words don’t apply just to Julius Caesar; they also apply to calendar-year partnerships, S corporations and limited liability companies treated as partnerships or S corporations for tax purposes. Why? The Ides of March, better known as March 15, is the federal income tax filing deadline for these entities. If you haven’t filed your return and are worried about having sufficient time to complete it, you can avoid the tragedy of a late return by filing for an extension. Contact us with questions.
Financial statements tell your business’s story, inside and out
As a business evolves, it will encounter the need to build credibility with outside parties, such as investors and lenders, and to make well-informed strategic decisions. In short, financial statements are a necessity. Typical components are an income statement, a balance sheet, and a cash flow statement. Also frequently included: a retained earnings/equity statement and a notes section. Financial statements tell an important, ongoing narrative of your company. We can help you generate these reports to the highest standards and use them to your best advantage.
When are LLC members subject to self-employment tax?
Limited liability company (LLC) members commonly claim that their distributive shares of LLC income (after deducting compensation for services in the form of guaranteed payments) aren’t subject to self-employment (SE) tax. But the IRS has been seeking back taxes and penalties from LLC members it claims have underreported SE income, with some success in court. At the greatest risk are LLC members who are comparable to general partners in a partnership. We can help you assess whether the IRS might successfully claim that you’ve underpaid SE taxes.
3 big TCJA changes affecting 2018 individual tax returns and beyond
When you file your 2018 income tax return, you’ll likely find that some big tax law changes affect you, besides the much-discussed tax rate cuts and reduced itemize deductions. For 2018 through 2025, the TCJA: 1) eliminates personal exemptions, 2) increases the standard deduction and 3) expands the child credit. The degree to which these changes will affect you depends on whether you have dependents and, if so, how many. It also depends on whether you typically itemize deductions. We can help ensure you claim all of the breaks available to you on your 2018 return.
Best practices when filing a business interruption claim
Business interruption insurance generally provides cash flow to cover revenues lost and expenses incurred while normal operations are suspended because of an applicable event. But submitting a claim can be time-consuming and requires preparation. First, notify your insurer of an interruption immediately and review your policy. Then reorganize your bookkeeping to segregate costs related to the business interruption and carefully maintain supporting documents. The loss calculation is often a contentious issue in making a claim. We can help you through the process.
Some of your deductions may be smaller (or nonexistent) when you file your 2018 tax return
While the Tax Cuts and Jobs Act reduces most income tax rates and expands some tax breaks, it may cause you to see these five itemized deductions shrink or disappear when you file your 2018 tax return: 1) state and local tax, 2) mortgage interest, 3) home equity debt interest, 4) miscellaneous, and 5) casualty and theft loss. The combination of a much larger standard deduction and smaller itemized deductions may mean that, even if itemizing has typically benefited you, you might now be better off taking the standard deduction. Contact us for details.
Some of your deductions may be smaller (or nonexistent) when you file your 2018 tax return
While the Tax Cuts and Jobs Act reduces most income tax rates and expands some tax breaks, it may cause you to see these five itemized deductions shrink or disappear when you file your 2018 tax return: 1) state and local tax, 2) mortgage interest, 3) home equity debt interest, 4) miscellaneous, and 5) casualty and theft loss. The combination of a much larger standard deduction and smaller itemized deductions may mean that, even if itemizing has typically benefited you, you might now be better off taking the standard deduction. Contact us for details.
The home office deduction: Actual expenses vs. the simplified method
Do you run a business from your home or perform business-related functions at home? You may be able to claim a home office deduction against your business income on your 2018 tax return. One option is to deduct actual expenses, including direct expenses, such as the cost of carpeting; a proportionate share of indirect expenses, such as utilities and insurance; and a depreciation allowance. But tracking actual expenses can be time-consuming. With the simplified method, you deduct $5 for each square foot of home office space, up to $1,500. Contact us for details.