The next estimated tax deadline is January 15 if you have to make a payment
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If you’re self-employed and don’t have paycheck withholding, you probably have to make estimated tax payments. These payments must be sent to the IRS on a quarterly basis. The 4th 2020 estimated tax payment deadline for individuals is Friday, Jan. 15. Even if you do have some withholding from paychecks or other payments, you may still have to make estimated payments if you receive income such as Social Security, prizes, rent, interest and dividends. Generally, taxpayers send four equal installments. But people who earn income unevenly during the year (for example, from a seasonal business) may be able to send smaller payments. Contact us if you have questions about the estimated tax rules.
New Legislation Passes Both Senate and House
Expected to be Signed into Law this Week New PPP funds and Deductibility of Covered Expenses Provisions This week the US House and Senate passed a roughly $900 billion COVID-19 relief bill as a part of The Consolidated Appropriations Act, 2021 which effectively funds the federal government through its fiscal year end September 2021. It […]
Rightsizing your sales force
With a difficult year almost over, now may be a good time to assess the size of your sales force. A good place to start is with various key performance indicators (KPIs) that enable you to quantify performance in dollars and cents. For sales managers, you might want to look at average annual sales volume. For sales representatives, look to more granular KPIs such as sales by rep and lead-to-sale percentage. Rightsizing your sales department, however, isn’t only a mathematical equation. Consider whether you have adequate coverage when salespeople take time off and weigh the possibility you’ve hired too aggressively. Above all, look at whether your customers are satisfied. Contact us for help.
Can you qualify for a medical expense tax deduction?
Medical services and prescriptions are expensive. You may be able to deduct some expenses on your tax return but the rules make it difficult for many people to qualify. You may be able to time certain medical expenses to your tax advantage. For 2020, the medical expense deduction can only be claimed to the extent unreimbursed costs exceed 7.5% of your adjusted gross income. You also must itemize deductions. If your total itemized deductions will exceed your standard deduction, moving nonurgent medical procedures and other expenses into 2020 may allow you to exceed the 7.5% floor. This might include refilling prescriptions, buying eyeglasses, going to the dentist and getting elective surgery.
Drive more savings to your business with the heavy SUV tax break
Are you considering replacing a car that you’re using in your business? Consider a heavy SUV, pickup or van because the caps on annual depreciation and expensing deductions for passenger automobiles don’t apply to them. SUVs rated at more than 6,000 pounds gross (loaded) vehicle weight qualify. In most cases, you can write off the entire cost of a new heavy SUV used entirely for business purposes as 100% bonus depreciation in the year it’s placed in service. Even if you elect out of bonus depreciation for the heavy SUV, you can elect to expense under Section 179 the cost of an SUV up to $25,900 for 2020. The remainder is depreciated under the usual rules. Other limitations may apply.
Paycheck Protection Program (PPP) Year End Updates
IRS Issues Guidance Tax Treatment of PPP Covered Expenses
New Potential Legislation Could Be Imminent By Weeks End
Maximize your 401(k) plan to save for retirement
If your employer offers a 401(k) or Roth 401(k) plan, contributing to it is a smart way to build a substantial nest egg. If you’re not already socking away the maximum allowed, consider increasing your contribution. With a 401(k), an employee elects to have a certain amount of pay deferred and contributed by an employer on his or her behalf to the plan. The contribution limit for 2020 is $19,500. Employees age 50 or older by year end are also permitted to make additional “catch-up” contributions of $6,500, for a total limit of $26,000 for 2020. The IRS recently announced that the 401(k) contribution limits for 2021 will remain the same as they are for 2020.
The QBI deduction basics and a year-end tax tip that might help you qualify
Are you eligible to claim the qualified business income (QBI) deduction? Taxpayers other than corporations may be entitled to a deduction of up to 20% of their QBI. For 2020, if taxable income exceeds $163,300 for single taxpayers, or $326,600 for a married couple filing jointly, the QBI deduction may be limited in certain cases. Taxpayers may be able to save taxes with this deduction by deferring income or accelerating deductions at year end so that they come under the dollar thresholds (or be subject to a smaller phaseout of the deduction). You also may be able to increase the deduction by increasing W-2 wages before year end. The rules are complex so consult with us before taking steps.
Should you add a technology executive to your staff?
Today’s businesses need to wield robust IT systems, digitally interact with customers and vendors, and use tech to spot upcoming trends. That’s why many companies hire a technology-focused executive such as: 1) A Chief Information Officer who manages internal IT infrastructure and operations, 2) A Chief Technology Officer who focuses on external processes and oversees development and production of tech products or services that will increase revenue, and 3) A Chief Digital Officer who looks for new markets, channels or opportunities. These positions call for major expenditures in hiring, payroll and benefits, so it’s important to thoroughly explore their feasibility. Our firm can help.
Family business owners must weave together succession and estate planning
For family business owners, among the most important issues to address is how to best weave together a succession plan with an estate plan. Transferring assets to the younger generation as early as possible removes future appreciation from your estate, minimizing any estate taxes. But you may not be ready to relinquish control of the business or your children might not be prepared to run it. To address this quandary, you can establish a family limited partnership or transfer nonvoting stock. Another challenge is older and younger generations may have conflicting financial needs. Solutions here may include conducting an installment sale or setting up a trust. Contact us for more information.
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