2022 Q3 Tax Calendar for Businesses and Other Employers

Here are some of the key tax-related deadlines affecting businesses and other employers during the third quarter of 2022. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements. August 1 Report income tax withholding and FICA taxes for second quarter 2022 (Form 941), and pay any tax due. (See the exception below, under “August 10.”) File a 2021 calendar-year retirement plan report (Form 5500 or Form 5500-EZ) or request an extension. August 10  Report income tax withholding and FICA taxes for second quarter 2022 (Form 941), if you deposited on time and in full all of the associated taxes due. September 15  ...

Measuring Residual Value for the Discounted Cash Flow Method

When valuing a business using the discounted cash flow method, residual (or terminal) value is a key component. The International Valuation Glossary — Business Valuation defines residual value as “the value as of the end of the discrete projection period in a discounted future earnings model.” Business valuation experts typically consider the capitalization of earnings method and the market approach when estimating residual value. Either (or both) may be appropriate, depending on the nature of the business, purpose of the valuation, reliability of the company’s financial projections and availability of market data. Capitalizing earnings The capitalization of earnings method is based on the assumption that cash flow will stabilize in the final year of the projection period. However, this is also the time period that’s subject to the...

Five Tax Implications of Divorce

Are you in the early stages of divorce? In addition to the tough personal issues that you’re dealing with, several tax concerns need to be addressed to ensure that taxes are kept to a minimum and that important tax-related decisions are properly made. Here are five issues to consider if you’re in the process of getting a divorce. Alimony or support payments. For alimony under divorce or separation agreements that are executed after 2018, there’s no deduction for alimony and separation support payments for the spouse making them. And the alimony payments aren’t included in the gross income of the spouse receiving them. (The rules are different for divorce or separation agreements executed before 2019.) Child support. No matter when the divorce or separation instrument is executed,...

Partially Empty Offices Can Be Fertile Ground for Theft

If most of your employees have worked from home since the start of the pandemic or are only gradually transitioning back to onsite work, your office may be emptier than in pre-COVID days. This can make theft easier. “Creepers” can gain access to offices or other physical facilities via unlocked doors and social engineering techniques and steal whatever they can get their hands on. They may even engage in corporate espionage and network hacking. Common schemes In a common creeper scheme, individuals pose as employees. They might enter a normally locked office by chatting with employees outside the building, then follow them through the door. If questioned, they could claim they left their badges at home. When the coast is clear, they steal purses, mobile devices and...

IRS Issues Mid-Year Business Mileage Rate Increase

Business owners are aware that the price of gas is historically high, which has made their vehicle costs soar. The average nationwide price of a gallon of unleaded regular gas on June 17 was $5, compared with $3.08 a year earlier, according to the AAA Gas Prices website. A gallon of diesel averaged $5.78 a gallon, compared with $3.21 a year earlier. Fortunately, the IRS is providing some relief. The tax agency announced an increase in the optional standard mileage rate for the last six months of 2022. Taxpayers may use the optional cents-per-mile rate to calculate the deductible costs of operating a vehicle for business. For the second half of 2022 (July 1–December 31), the standard mileage rate for business travel will be 62.5 cents per...

Your Estate Plan: Don't Forget About Income Tax Planning

As a result of the current estate tax exemption amount ($12.06 million in 2022), many people no longer need to be concerned with federal estate tax. Before 2011, a much smaller amount resulted in estate plans attempting to avoid it. Now, because many estates won’t be subject to estate tax, more planning can be devoted to saving income taxes for your heirs. Note: The federal estate tax exclusion amount is scheduled to sunset at the end of 2025. Beginning on January 1, 2026, the amount is due to be reduced to $5 million, adjusted for inflation. Of course, Congress could act to extend the higher amount or institute a new amount. Here are some strategies to consider in light of the current large exemption amount. Gifts that use...

Is Your Corporation Eligible for the Dividends-Received Deduction?

There’s a valuable tax deduction available to a C corporation when it receives dividends. The “dividends-received deduction” is designed to reduce or eliminate an extra level of tax on dividends received by a corporation. As a result, a corporation will typically be taxed at a lower rate on dividends than on capital gains. Ordinarily, the deduction is 50% of the dividend, with the result that only 50% of the dividend received is effectively subject to tax. For example, if your corporation receives a $1,000 dividend, it includes $1,000 in income, but after the $500 dividends-received deduction, its taxable income from the dividend is only $500. The deductible percentage of a dividend will increase to 65% of the dividend if your corporation owns 20% or more (by vote...

Valuing ESOPs

Employee stock ownership plans (ESOPs) provide tax-saving opportunities for business owners who want to cash out and transfer ownership to employees without immediately giving up control of the business. However, valuing stock held by an ESOP is an ongoing challenge for the fiduciaries who administer them, especially when the sponsoring company is privately held. Valuation requirement An ESOP is a type of qualified retirement plan that invests primarily in the sponsoring company’s stock. There are about 6,500 ESOPs and equivalent plans in the United States today, employing roughly 14 million U.S. employees, according to the National Center for Employee Ownership. ESOPs are subject to the same IRS and U.S. Department of Labor (DOL) rules as other qualified retirement plans, including minimum coverage requirements and contribution limits. The fair...

Do You Have to Pay Tax on Social Security Benefits?

Some people who begin claiming Social Security benefits are surprised to find out they’re taxed by the federal government on the amounts they receive. If you’re wondering whether you’ll be taxed on your Social Security benefits, the answer is: It depends. The taxation of Social Security benefits depends on your other income. If your income is high enough, between 50% and 85% of your benefits could be taxed. (This doesn’t mean you pay 85% of your benefits back to the federal government in taxes. It merely means that you’d include 85% of them in your income subject to your regular tax rates.) Figuring your income To determine how much of your benefits are taxed, first determine your other income, including certain items otherwise excluded for tax purposes (for...