Does your employer provide life insurance? Here are the tax consequences
Employer-provided life insurance is a coveted fringe benefit. However, if group term life insurance is part of your benefit package, and the coverage is higher than $50,000, there may be undesirable income tax implications. The first $50,000 of group term life insurance coverage that your employer provides is excluded from taxable income and doesn’t add anything to your income tax bill. But the employer-paid cost of group term coverage in excess of $50,000 is taxable income to you. It’s included in the taxable wages reported on your Form W-2 — even though you never actually receive it. We can answer questions about group life insurance coverage and whether it’s adding to your tax bill.
Expanding succession planning beyond ownership
Business owners are regularly urged to create and update their succession plans. If you want to take yours to the next level, consider expanding its scope beyond ownership. Many companies have key employees whose departure would significantly and adversely affect the business. Create a list of names and identify who might succeed them. Look for your “high potential” (HiPo) employees. That is, those with the ambition, motivation and ability to move up substantially in the organization. Once you’ve identified your HiPos, develop action plans for each. Consider your business’s needs as well as each candidate’s personality and learning style. Contact us for help.
Is your business underusing its accounting software?
Many businesses underuse their accounting software. The seeds of the problem often lie in an insufficient or even nonexistent training process. Consider engaging a consultant to review your accounting software’s basic functions with staff and then teach them time-saving tricks and advanced features. Encourage employees to look for labor-intensive steps that could be automated and steps that don’t add value or are redundant. In addition, ensure managers responsible for financial oversight of your company are reviewing your financial statements and other critical documents for inefficiencies and errors. We can help you reevaluate your accounting software use and suggest ideas for improvement.
Scholarships are usually tax free but they may result in taxable income
If your child is fortunate enough to be awarded a scholarship, you may wonder about the tax implications. Scholarships and fellowships are generally (but not always) tax free for students at elementary, middle and high schools, as well as those attending college, graduate school or accredited vocational schools. It doesn’t matter if the scholarship makes a direct payment to the student or reduces tuition. However, certain conditions must be met. A scholarship is tax free if it’s used to pay for tuition and fees required to attend the school, and fees, books, supplies and equipment required of students. Room and board, travel, research and clerical help don’t qualify. Contact us to learn more.
Large cash transactions with your business must be reported to the IRS
If your business receives large amounts of cash or cash equivalents, you may be required to report the transactions to the IRS. Each person engaged in a trade or business who receives more than $10,000 in cash in one transaction, or in two or more related transactions, must file Form 8300. Transactions conducted in a 24-hour period are considered related transactions. “Cash equivalents” include cashier’s checks (bank checks), bank drafts, traveler’s checks and money orders. In addition to filing Form 8300 on paper, e-filing is an option. The form is due 15 days after a transaction. Contact us with questions.
Evolve Your Supply Chain Management to Be More Strategic
The pandemic sent numerous shock waves through the world of small and medium- sized manufacturers (SMMs), and perhaps the most lasting have been disruptions and changes in the global supply chain. SMMs are now dealing with the reality that uncertainty is now part of a recipe for running a successful business. Among those uncertainties is […]
Is your lean journey stalled?
So, you’ve started your lean journey, got your people trained, things are heading in the right direction. You have some half-decent morning meetings going, people are making improvements on a regular basis, and overall you’re thrilled with the results of this crazy lean thing. Before you know it, the honeymoon is over. It seems like […]
Is an LLC the right choice for your small business?
Is a limited liability company (LLC) the right choice for your small business? Like the shareholders of a corporation, LLC owners (called members) generally aren’t liable for the debts of the business except to the extent of their investment. So their personal assets are protected from the entity’s creditors. Plus, partnership earnings aren’t subject to an entity-level tax. Instead, they “flow through” to the owners (in proportion to their respective interests), are reported on the owners’ individual returns and taxed only once. To the extent the income passed through to you is qualified business income, you’ll be eligible to take the pass-through deduction, subject to various limitations.
5 possible tax aspects of a parent moving into a nursing home
If your parent is entering a nursing home, there may be tax breaks. For example, the costs of qualified long-term care, including nursing home care, are deductible as medical expenses to the extent they, along with other medical expenses, exceed 7.5% of adjusted gross income (AGI). If your parent qualifies as your dependent, you can include any medical expenses you incur for your parent along with your own when determining your medical deduction. Premiums paid for a qualified long-term care insurance contract are deductible as medical expenses (subject to annual limitations based on age) to the extent they, along with other medical expenses, exceed the percentage-of-AGI threshold.
2-Day Online auction of Precision Tooling & Warehouse Support Equipment
The public will have a major opportunity to participate in a 2-day facility liquidation auction. Assets in this auction include a massive selection of tooling, forklifts, compressors, plant support equipment & much more. Registration is free and open and you will get more details by clicking the following link aucto.com. Polk & AssociatesLarge enough to serve a […]
You must be logged in to post a comment.