Posts by Richard Huffman

Are you an employee, a partner, a partner who doesn’t know it — or a combination of these classifications? The answer can have serious tax implications. If you participate in a business that’s operated as a partnership or a limited liability company, here are some recent developments that you need to know. IRS Position on Dual Status Longstanding IRS guidance in Revenue Ruling 69-184 states that a partner can’t also be an employee of the same partnership. However, this policy has recently come into question. Some tax experts have been prodding the IRS to allow dual employee/partner status in certain
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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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On October 5, 2016, the IRS released new temporary and final Section 752 regulations. Sec. 752 of the Internal Revenue Code and related regulations explain how to allocate partnership debt among partners for purposes of calculating the basis of their partnership interests. This calculation determines what’s often referred to as the partners’ “outside basis” in the partnership (their basis for deducting losses and receiving tax-free distributions). In some situations, the new regulations make it more difficult for partnerships to manipulate the rules to increase the outside basis of certain partners for tax planning purposes. In most situations, however, the effects
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When business owners sell C corporation stock for a big profit, they usually qualify for the current maximum 20 percent maximum federal rate on long-term capital gains, assuming they’ve owned the shares for over a year. While a 20 percent capital gains rate is good, a tax-free sale to an ESOP could be even better. Current rules: The maximum federal income tax rate on C corporation dividends is now 20 percent for single people with taxable income above $400,000 ($450,000 for married joint-filing couples). Upper-income individuals may also owe the new 3.8 percent Medicare surtax on dividend income. For other
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Do you own a company or are interested in starting a company selling products or services over the Internet? It is extremely important to understand the laws pertaining to the collection of sales taxes. If you run a business with a physical “bricks and mortar” store, collecting sales tax is relatively straightforward. You charge your customers the sales tax required by the jurisdiction where your business is located. For example, if you operate a retail store in Pittsburgh, Pennsylvania, you would collect both state and local sales taxes from customers buying merchandise at your store. But suppose you start selling
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The big advantage of Section 529 college savings plans is that withdrawals used to cover qualified higher education expenses are free from federal income tax (and usually state income taxes too). That part is very easy to understand, but the full story on withdrawals is not so simple. What are qualified expenses? What happens if you take out money for expenses that aren’t qualified? Here are five important facts that you should know about 529 plan withdrawals: Fact #1: You Have Two Basic Payment Options You can direct the plan to make a withdrawal check out in the name of
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Choosing the appropriate legal form for a business is one of the first issues most entrepreneurs face. It is an important decision at the formation stage and also as a business grows. Sole proprietorships are generally the easiest. Corporations offer some different advantages, but often with additional complexity. This article addresses some of the pros and cons of different types of legal structures for businesses. Even if your enterprise has been in existence for a while, it may be time to review your options. There can be many complexities in determining the best legal structure and a qualified attorney may be
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