Stretch your college student’s spending money with the dependent tax credit
If you’re the parent of a child age 17 to 23, and you pay all (or most) of his or her expenses, you may be surprised to learn you’re not eligible for the child tax credit. But there’s a $500 dependent tax credit that may be available to you. That can provide some extra spending money! To qualify, you and your child must pass certain tests. These include: The child lives with you for over half the year; the child is over age 16 and up to age 23 if he or she is a student; and you provide over half of the child’s support for the year. Contact us for more details.
Could your business benefit from the tax credit for family and medical leave?
The Tax Cuts and Jobs Act created a federal tax credit for employers that provide qualified paid family and medical leave to employees. However, it’s subject to numerous rules and is only available for the 2018 and 2019 tax years. An eligible employer can claim a credit equal to 12.5% of wages paid to qualifying employees who are on family and medical leave, if the leave payments are at least 50% of the normal wages paid to them. For each 1% increase over 50%, the credit rate increases by 0.25%, up to a maximum credit rate of 25%. Contact us for more information.
There’s still time for small business owners to set up a SEP retirement plan for last year
If you own a business and don’t have a tax-advantaged retirement plan, it’s not too late to establish one and reduce your 2018 tax bill. A Simplified Employee Pension (SEP) can be set up for 2018 as long as you do it before your 2018 income tax return filing deadline. You have until the same deadline to make 2018 contributions and claim a potentially substantial deduction on your 2018 return. Contributions are discretionary and may be as large as $55,000 for 2018. Contact us with questions and to discuss whether it makes sense for you to set up a SEP for 2018.
5 ways to give your sales staff the support they really need
Salespeople may appear self-sufficient, but they need support just like everyone else. First, provide your sales team with the most cutting-edge metrics. Second, be sure to properly train salespeople upon hire and continue “upskilling” them thereafter. Make sure performance evaluations are comprehensive and productive. Urge supervisors to interact regularly with sales staff to keep morale high and guard against unethical behavior or fraud. Last, regularly re-evaluate your sales compensation model to ensure it’s the best fit. We can provide further info.
Using knowledge management to develop your succession plan
As you develop your succession plan, you’ll need to consider how to mitigate the loss of pure know-how that will occur when you step down. One way is to implement a knowledge management strategy. This is a formal process of treating knowledge as a valuable company asset. Knowledge generally can be subdivided into two types: 1) explicit (already documented) or 2) tacit (exists only in your brain). A comprehensive knowledge management effort related to your succession plan will call on you to gather both types in various categories. Contact us for further info.
The 2018 gift tax return deadline is almost here
Did you make large gifts to your heirs in 2018? If so, it’s important to determine whether you’re required to file a gift tax return by April 15 (Oct. 15 if you file for an extension). Generally, you’ll need to file one if you made 2018 gifts that exceeded the $15,000-per-recipient gift tax annual exclusion (unless to your U.S. citizen spouse) and in certain other situations. But sometimes it’s desirable to file a gift tax return even if you aren’t required to. If you’re not sure whether you must (or should) file a 2018 gift tax return, contact us.
Will leasing equipment or buying it be more tax efficient for your business?
Recent changes to tax law and accounting rules may affect whether you decide to lease or buy equipment or other fixed assets. Many businesses that have typically leased assets are now buying them instead. Lease payments generally are deductible, but buying allows you to take advantage of expanded Section 179 and bonus depreciation deductions to potentially write off the full cost of equipment in the year it’s purchased. Also, the accounting advantages of leases generally are disappearing. We can help you determine whether leasing or buying is better for you.
Vehicle-expense deduction ins and outs for individual taxpayers
It’s not just businesses that can deduct vehicle-related expenses. Individuals also can deduct them in certain circumstances. But the TCJA might reduce your deduction compared to your 2017 return. For 2017, miles driven for business, moving, medical and charitable purposes were potentially deductible. For 2018 through 2025, business and moving miles are deductible only in much more limited circumstances. The near-doubling of the standard deduction may also affect the tax benefit. Questions? Contact us. We can help you with your 2018 return and 2019 tax planning.
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.