Haven’t filed your 2017 income tax return yet? Beware of these pitfalls
The April 17 federal income tax filing deadline is nearly upon us. If you haven’t filed your individual return yet, you may be thinking about an extension. This allows you to delay filing your return until Oct. 15, 2018. But consider these pitfalls: If you expect to owe tax, to avoid potential interest and penalties you still generally must pay any tax due by April 17. If you expect a refund, you’ll be extending the amount of time your money is in the government’s pockets rather than your own. Contact us if you have questions about avoiding interest and penalties.
A net operating loss on your 2017 tax return isn’t all bad news
If a company’s deductible expenses exceed its income, generally a net operating loss (NOL) occurs. The upside is tax benefits: If the tax year generating the NOL ended on or before 12/31/17, the NOL can be carried back up to 2 years to generate an immediate tax refund and boost cash flow. Any remaining NOL can be carried forward up to 20 years. Or the entire NOL can be carried forward. But the TCJA makes significant, generally unfavorable, changes to the tax treatment of NOLs. The rules are complicated, especially for pass-through entities. Contact us for details.
Blockchain may soon drive business worldwide
“Blockchain” may sound like something that goes on your car, but it’s actually a digitally distributed ledger typically shared on a peer-to-peer network. Entries are stored in blocks, with each block containing a timestamp and providing a link to the previous block. Nothing can be altered without changing every block under the approval of most involved parties. Secure and streamlined, blockchain is already used for certain financial transactions. In the future, it could affect mergers and acquisitions, the supply chain, health care and many other industries.
Should you file Form SS-8 to ask the IRS to determine a worker’s status?
Classifying workers as independent contractors (rather than employees) can save businesses money. But the IRS is on the lookout for improper classifications, and it may assess significant back taxes, interest and penalties. To help avoid this, you can file optional IRS Form SS-8, “Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.” But the IRS has a history of reflexively classifying workers as employees, and filing this form may even trigger an audit. Contact us for alternative ways to address this issue.
You still have time to make 2017 IRA contributions
Have you made your 2017 IRA contributions? You still have time: The deadline is April 17, 2018. Deductible contributions will lower your 2017 tax bill, but even nondeductible ones can be beneficial because of tax-deferred growth (tax-free in Roth accounts). The 2017 contribution limit is $5,500 (plus $1,000 for those age 50 or older on Dec. 31, 2017). But your traditional IRA deduction or Roth IRA contribution may be further limited based on your income. Remember, once the deadline has passed, the savings opportunity is lost forever. Contact us to learn more.
3 ways to supercharge your supervisors
When people managers put forth their best efforts, businesses are more likely to get the most out of employees. Here are three ways to “supercharge” your supervisors: First, turn them into teachers, encouraging them to look for learning opportunities and empowering them with ways to reward employees. Second, boost their reaction times to potential problems; train them to intervene early when minor difficulties develop and to thoroughly investigate more major conflicts. Third, discourage micromanaging, because it tends to lower morale and efficiency.
LIHTC Increase Included in Spending Bill
Cantwell, who has been pushing to expand the LIHTC program for several years, cited how the recent tax reform bill harms future development of affordable housing. Although the 2017 tax legislation retained the housing credit program, several other measures in the bill are expected to significantly reduce the number of affordable homes built in the nation.
Could your next business loan get “ratio’d”?
Looking for a business loan? If so, try to find out how each bank will evaluate your default probability. Many check multiple financial ratios and, if one looks askew, they may deny the loan. Examples include current ratio (current assets / current liabilities) and total asset turnover ratio (annual revenue / total assets). Banks may also apply industry-specific ratios and other benchmarking tools such as community-based scoring. We can help evaluate your financials and determine where improvement may be needed to attract financing.
Can you claim your elderly parent as a dependent on your tax return?
If you supported an elderly parent last year, you might qualify for an adult-dependent exemption of up to $4,050 on your 2017 tax return. For you to qualify, in most cases your parent must have less gross income for the tax year than the exemption amount and you must have contributed more than 50% of your parent’s financial support. For 2018, the exemption is suspended, but you might be eligible for a $500 “family” tax credit for your adult dependent. We’d be happy to provide additional information. Contact us to learn more.
2018 Q2 tax calendar: Key deadlines for businesses and other employers
Here are some key tax-related deadlines for businesses and other employers during Quarter 2 of 2018. APRIL 17: If a calendar-year C corporation, file or extend your 2017 income tax return and pay any tax due, and pay the first installment of 2018 estimated taxes. APRIL 30: Report income tax withholding and FICA taxes for Q1 of 2018 (unless eligible for May 10 deadline). JUNE 15: If a calendar-year C corp., pay the second installment of 2018 estimated income taxes. Contact us for more about the filing requirements to ensure you’re meeting all applicable deadlines.