Yearly Archives 2016

The holidays can be a joyous — but hectic — time of year. While you’re juggling shopping for gifts, decorating your home and planning get-togethers with friends and family, it’s easy to forget to spend any remaining funds in your Flexible Spending Accounts (FSAs) before New Year’s Day. However, if you fail to observe the “use-it-or-lose-it rule,” you could forfeit any money left over in your accounts, unless a special provision applies. In addition to spending what’s left of last year’s FSA balance, November is the time of year when you need to decide on the types of spending/savings accounts
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The IRS announced that it is extending one of the deadlines for providing 2016 Affordable Care Act (ACA) information statements to recipients. Specifically, the due date for furnishing to individuals the 2016 Form 1095-B (Health Coverage) and the 2016 Form 1095-C, (Employer-Provided Health Insurance Offer and Coverage) is extended from January 31, 2017, to March 2, 2017. Q&As about the Process and Extended Due Date What about filing these statements with the IRS? Is there an extension? No. The deadline for filing the forms with the IRS is not being extended. The IRS has determined that there’s no similar need
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The Joint Committee on Taxation (JCT) is a nonpartisan Congressional committee that, among other things, assists in the analysis and drafting of proposed federal tax legislation and prepares reports that interpret newly enacted federal tax legislation. The JCT recently issued the Overview of the Federal Tax System as in Effect for 2016. Here are the details of that report, including some interesting trends about business taxes. Background on Business Taxes The federal income tax treatment of a domestic business operation — one that’s domiciled in the United States — depends on how it’s set up. A business’s “choice of entity”
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Do you want to be extra-generous to employees who are doing a good job? Bonuses and gifts can be an effective motivational tool, but be aware of all the tax consequences. Usually, employees will face a tax bill for your generosity. Background: Unlike gifts made on a personal level, gifts from an employer to employee (outside the context of employment) are generally taxable to the recipient as supplemental wages. In other words, the gifts are subject to both income tax and employment taxes. The value of the gifts must be reported on the employee’s Form W-2 for that year. In
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Corporations can generally deduct interest on debts for federal tax purposes. A valid obligation exists if the parties intended to create a debt, and the debt is enforceable and unconditional. In contrast, a capital contribution is a direct or indirect contribution of cash or other property to the capital of a business entity. Generally, a contribution to the capital of a corporation isn’t treated as taxable income to the corporation, and the contributor can’t deduct the payment for tax purposes. The issue of whether certain corporate instruments should be classified as debt owed by the corporation or as an equity
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In California, if you, as a taxpayer, are the 100% shareholder and also an officer of a corporation, you can save up to $998 in 2017 by electing to exclude your wages from the corporation from SDI withholding. The SDI withholding rate for 2017 is 0.9%. The taxable wage limit is $110,902 for each employee per calendar year. Therefore, the maximum withholding for each employee is $998. The taxpayer can claim the exclusion by filing a simple one page statement with the California Employment Development Department (EDD). The exclusion will be effective in the calendar quarter filed. (see www.edd.ca.gov/pdf_pub_ctr/de459.pdf). However,
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Year end is rapidly approaching. It’s now time to consider making some moves that will lower your 2016 tax bill and get you into position for tax savings in future years. This article offers some year-end planning tips for individuals — while keeping the results of the recent election in mind. Current Federal Tax Scene The 2016 federal income tax rate picture for individuals is the same as last year, except the rate brackets have been adjusted slightly for inflation. Specifically, the tax rates remain 10%, 15%, 25%, 28%, 33% and 35%. The highest-income individuals face a top rate of
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With Donald Trump as the president elect and Republicans holding a majority in the U.S. House and Senate, GOP tax reform appears likely in 2017. While campaigning, Mr. Trump promised big tax changes. Here’s a digest of his proposals, according to his website. Individual Tax Rates and Capital Gains Taxes For individuals, President-elect Trump proposes fewer tax brackets and lower top rates: 12%, 25% and 33% — versus the current rates of 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. The tax rates on long-term capital gains would be kept at the current 0%, 15% and 20%. Proposed Rate Brackets
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Year-End Tax Strategies for Small Businesses It’s not too late to take steps to significantly reduce your 2016 business income tax bill and lay the groundwork for tax savings in future years. Here’s a summary of some of the most effective year-end tax-saving moves for small businesses under the existing Internal Revenue Code. After President Obama hands over the baton to President-elect Trump and new members of Congress are sworn into office in January, the tax laws could change. Juggle Pass-Through Income and Deductible Expenditures If your business operates as a sole proprietorship, S corporation, limited liability company (LLC) or
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Get Ready Businesses: Some Filing Due Dates Are Changing Thanks to recent legislation, the due dates have been changed for some information returns and related statements and for some business tax returns. Here’s what you need to know. Earlier Due Dates for Forms 1099-MISC and W-2 When a business pays non–employee compensation aggregating to $600 or more to a single payee in a tax year, the business must file a Form 1099-MISC to report the payments to the IRS. Similarly, employers must report wages paid to employees on Forms W-2. Copies of these forms (called payee statements) must also be
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