20 Feb 2023
0

Many Tax Limits Affecting Businesses Have Increased for 2023

Roger Rossmeisl, CPA
Small Business Tax Briefs
Many Tax Limits Affecting Businesses Have Increased for 2023

An array of tax-related limits that affect businesses are indexed annually, and due to high inflation, many have increased more than usual for 2023. Here are some that may be important to you and your business. Social Security tax The amount of employees’ earnings that are subject to Social Security tax is capped for 2023 at $160,200 (up from $147,000 for 2022). Deductions  Section 179 expensing: Limit: $1.16 million (up from $1.08 million) Phaseout: $2.89 million (up from $2.7 million) Income-based phase-out for certain limits on the Sec. 199A qualified business income deduction begins at: Married filing jointly: $364,200 (up from $340,100) Other filers: $182,100 (up from $170,050) Retirement plans  Employee contributions to 401(k) plans: $22,500 (up from $20,500) Catch-up contributions to 401(k) plans: $7,500 (up from $6,500) Employee...

20 Feb 2023
0

What Business Owners Can Do About Insurance Fraud

Roger Rossmeisl, CPA
Fraud Briefs
What Business Owners Can Do About Insurance Fraud

According to various sources, around 10% of all insurance claims involve fraud. Insurance companies generally pass along the cost of these fraud losses to policyholders in the form of higher premiums. Unfortunately, small businesses, which are generally less able to pay premium hikes, are particularly vulnerable to insurance fraud. To protect your company from losses and minimize the likelihood of increased premiums, learn how to identify insurance fraud. Areas of concern There are several forms of insurance fraud that could potentially affect your business: Workers’ compensation. In these schemes, an employee exaggerates or fabricates an injury or illness to receive workers’ compensation benefits. For example, a worker could mischaracterize an injury from a minor accident as serious or claim that an existing, non-work-related condition was the result of...

20 Feb 2023
0

Why You Might Want to File Early and Answers to Other Tax Season Questions

Roger Rossmeisl, CPA
Individual Tax Briefs
Why You Might Want to File Early and Answers to Other Tax Season Questions

The IRS announced it opened the 2023 individual income tax return filing season on January 23. That’s when the agency began accepting and processing 2022 tax year returns. Even if you typically don’t file until much closer to the mid-April deadline (or you file for an extension), consider filing earlier this year. The reason is you can potentially protect yourself from tax identity theft. Here are some answers to questions taxpayers may have about filing. How can your tax identity be stolen? In a typical tax identity theft scam, a thief uses another individual’s personal information to file a fraudulent tax return early in the filing season and claim a bogus refund. The actual taxpayer discovers the fraud when he or she files a return and is told by...

20 Feb 2023
0

Discounting vs Capitalizing: Common Business Valuation Methods at a Glance

Roger Rossmeisl, CPA
Automotive, Valuation Briefs
Discounting vs Capitalizing: Common Business Valuation Methods at a Glance

Two techniques fall under the income approach umbrella when valuing a private business interest: the discounted cash flow (DCF) method and the capitalization of earnings method. How do these two commonly used methods compare — and which one is appropriate for a specific investment? Fundamentals of discounting The DCF method estimates the present value of future expected net cash flows using a discount rate. It entails these basic steps: Compute future cash flows. Potential investors are generally trying to determine what’s in it for them in terms of cash flow and an acceptable return on investment. Historical earnings are often the starting point for estimating expected cash flow over a discrete discounting period of, say, five or seven years. Then, the valuation expert calculates a terminal (or residual)...

20 Feb 2023
0

Tax-Saving Ways to Help Pay for College – Once Your Child Starts Attending

Roger Rossmeisl, CPA
Individual Tax Briefs
Tax-Saving Ways to Help Pay for College - Once Your Child Starts Attending

If you have a child or grandchild in college — congratulations! To help pay for the expenses, many parents and grandparents saved for years in tax-favored accounts, such as 529 plans. But there are also a number of tax breaks that you may be able to claim once your child begins attending college or post-secondary school. Tuition tax credits  You can take the American Opportunity Tax Credit (AOTC) of up to $2,500 per student for the first four years of college — a 100% credit for the first $2,000 in tuition, fees, and books, and a 25% credit for the second $2,000. You can take a Lifetime Learning Credit (LLC) of up to $2,000 per family for every additional year of college or graduate school — a...

17 Feb 2023
0

Keeping Debtors Honest with a Solvency Opinion

Roger Rossmeisl, CPA
Fraud Briefs
Keeping Debtors Honest with a Solvency Opinion

Are you worried your business won’t receive what a liquidating creditor owes it? In most cases, liquidating companies come by their financially distressed situations honestly. But there’s always a chance that a debtor has made fraudulent transfers or taken other steps to hide assets from creditors. A solvency expert can help you and your legal counsel determine whether a liquidating business is capable of meeting its interest and repayment obligations. How experts test the balance sheet Solvency experts consider many issues when examining a business. But ultimately, the outcome of three tests enable an expert to determine solvency. The first is to assess the business’s balance sheet. At the time of the transaction at issue, did the debtor company’s asset value exceed its liability value? Assets are generally...

15 Feb 2023
0

How the New SECURE 2.0 Law May Affect Your Business

Roger Rossmeisl, CPA
Small Business Tax Briefs
How the New SECURE 2.0 Law May Affect Your Business

If your small business has a retirement plan, and even if it doesn’t, you may see changes and benefits from a new law. The Setting Every Community Up for Retirement Enhancement 2.0 Act (SECURE 2.0) was recently signed into law. Provisions in the law will kick in over several years. SECURE 2.0 is meant to build on the original SECURE Act, which was signed into law in 2019. Here are some provisions that may affect your business. Retirement plan automatic enrollment. Under the new law, 401(k) plans will be required to automatically enroll employees when they become eligible, beginning with plan years after December 31, 2024. Employees will be permitted to opt out. The initial automatic enrollment amount would be at least 3% but not more than 10%....

15 Feb 2023
0

Tax-Wise Ways to Save for College

Roger Rossmeisl, CPA
Individual Tax Briefs
Tax-Wise Ways to Save for College

If you’re a parent or grandparent with college-bound children, you may want to save to fund future education costs. Here are several approaches to take maximum advantage of the tax-favored ways to save that may be available to you. Savings bonds  Series EE U.S. savings bonds offer two tax-saving opportunities when used to finance college expenses: You don’t have to report the interest on the bonds for federal tax purposes until the bonds are cashed in, and Interest on “qualified” Series EE (and Series I) bonds may be exempt from federal tax if the bond proceeds are used for qualified college expenses. To qualify for the college tax exemption, you must purchase the bonds in your own name (not the child’s) or jointly with your spouse. The proceeds...

14 Feb 2023
0

Looking to the Future When Valuing a Business

Roger Rossmeisl, CPA
Valuation Briefs
Looking to the Future When Valuing a Business

Historical financial results are only relevant in a valuation to the extent that the business expects to achieve similar results in the coming years. When projecting future economic benefits, it’s important to consider expected changes to a subject company’s internal and external conditions. Challenging the status quo The last three to five years of financial statements are usually on the list of documents experts use to value a business. With some companies, it’s possible to simply take historical financial statements and apply an assumed growth rate into perpetuity. But experienced valuation professionals know that future performance can’t always be expected to mirror the past. One key reason is capacity constraints. To achieve an expected growth rate, a larger facility or additional equipment may be needed over the long...

05 Feb 2023
0

IRS Issues Guidance and FAQ Updates Related to the Clean Vehicle Tax Credits

Roger Rossmeisl, CPA
Automotive, Individual Tax Briefs, Small Business Tax Briefs
IRS Issues Guidance and FAQ Updates Related to the Clean Vehicle Tax Credits

On 2/3/2023, the IRS issued Notice 2023-16 guidance that modifies the definitions of certain vehicle classifications for the new, previously owned and qualified commercial clean vehicle tax credits. As a result of this notice, the IRS updated the related frequently asked questions for these credits which can be found on IRS Fact Sheet 2023-4 here: IRS Fact Sheet 2023-04 (This is Blog Post #1340)...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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