27 Oct 2024
0

In 2025, the Social Security Wage Base is Going Up

Roger Rossmeisl, CPA
Small Business Tax Briefs
In 2025, the Social Security Wage Base is Going Up

As we approach 2025, changes are coming to the Social Security wage base. The Social Security Administration recently announced that the wage base for computing Social Security tax will increase to $176,100 for 2025 (up from $168,600 for 2024). Wages and self-employment income above this amount aren’t subject to Social Security tax. If your business has employees, you may need to budget for additional payroll costs, especially if you have many high earners. Social Security basics The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees and self-employed workers. One is for Old Age, Survivors and Disability Insurance, which is commonly known as the Social Security tax, and the other is for Hospital Insurance, which is commonly known as the Medicare tax. A maximum amount of compensation...

20 Oct 2024
0

Reminder That Initial BOI Reporting for Pre-1/1/24 Entities is Due 1/1/25

Roger Rossmeisl, CPA
Automotive, Small Business Tax Briefs
Reminder that Initial BOI Reporting for Pre-1/1/24 Entities is Due 1/1/25

In 2021, Congress passed the Corporate Transparency Act (CTA). The CTA requires many entities doing business in the US to report information about the individuals who ultimately own or control them (the entity's "beneficial owners").  The CTA's expanded anti-money laundering laws require that small businesses report this beneficial owner information to the Financial Crimes Enforcement Network (FinCEN) in an effort to create a national database for use by national security and law enforcement agencies to prevent the use of shell companies for criminal activity.  The new "Beneficial Ownership Interest" (BOI) reporting requirements, effective January 1, 2024, apply to domestic and foreign companies created or registered to do business in the US by filing a document with the Secretary of State (or similar office). While certain types...

20 Oct 2024
0

How Your Business Can Prepare For and Respond to an IRS Audit

Roger Rossmeisl, CPA
Small Business Tax Briefs
How Your Business Can Prepare for and Respond to an IRS Audit

The IRS has been increasing its audit efforts, focusing on large businesses and high-income individuals. By 2026, it plans to nearly triple its audit rates for large corporations with assets exceeding $250 million. Under these plans, partnerships with assets over $10 million will also see audit rates increase tenfold by 2026. This ramp-up in audits is part of the IRS’s broader strategy, funded by the Inflation Reduction Act, to target wealthier entities and high-dollar noncompliance. The IRS doesn’t plan to increase audits for individuals making less than $400,000 annually. Small businesses are also unlikely to see a rise in audit rates in the near future, as the IRS is prioritizing more complex returns for higher-wealth entities. For example, the tax agency has announced that one focus area is...

13 Oct 2024
0

Why Am I Being Audited and How Does the IRS Conduct Them?

Roger Rossmeisl, CPA
Individual Tax Briefs, Small Business Tax Briefs
Why Am I Being Audited and How Does the IRS Conduct Them?

As appearing at the IRS web page entitled "IRS Audits". An IRS audit is a review/examination of an organization's or individual's books, accounts and financial records to ensure information reported on their tax return is reported correctly according to the tax laws and to verify the reported amount of tax is correct. Why am I being selected for an audit? Selection for an audit does not always suggest there's a problem. The IRS uses several different selection methods: Random selection and computer screening - sometimes returns are selected based solely on a statistical formula. We compare your tax return against "norms" for similar returns. We develop these "norms" from audits of a statistically valid random sample of returns, as part of the National Research Program the IRS conducts....

13 Oct 2024
0

IRS Accelerates Work on Employee Retention Tax Credit Claims

Roger Rossmeisl, CPA
Automotive, Current Events, Small Business Tax Briefs
IRS Acellerates Work on ERTC Claims

As Reported via IR-2024-263 on 10/10/2024 The Internal Revenue Service announced on 10/10/2024 continued progress on Employee Retention Tax Credit claims, with processing underway on about 400,000 claims, representing about $10 billion of eligible claims.     Work on the claims for small businesses and others is ongoing as the agency continues to navigate a large volume of claims from the complex pandemic-era credit. A significant number of the Employee Retention Tax Credit (ERTC) claims came in during a period of aggressive marketing by promoters, leading to a large percentage of improper, ineligible claims.     “The IRS understands the vital importance of Employee Retention Tax Credits payments for struggling small businesses, and we are continuing to make important progress on one of the most complex tax administration provisions we’ve...

13 Oct 2024
0

Advantages of Keeping Your Business Separate From Its Real Estate

Roger Rossmeisl, CPA
Small Business Tax Briefs
Advantages of Keeping Your Business Separate from it's Real Estate

Does your business require real estate for its operations? Or do you hold property titled under your business’s name? It might be worth reconsidering this strategy. With long-term tax, liability and estate planning advantages, separating real estate ownership from the business may be a wise choice. How taxes affect a sale Businesses that are formed as C corporations treat real estate assets as they do equipment, inventory and other business assets. Any expenses related to owning the assets appear as ordinary expenses on their income statements and are generally tax deductible in the year they’re incurred. However, when the business sells the real estate, the profits are taxed twice — at the corporate level and at the owner’s individual level when a distribution is made. Double taxation is avoidable,...

06 Oct 2024
0

Does Your Business Need to Report Employee Health Coverage?

Roger Rossmeisl, CPA
Small Business Tax Briefs
Does Your Business Need to Report Employee Health Coverage?

Employee health coverage is a significant part of many companies’ benefits packages. However, the administrative responsibilities that accompany offering health insurance can be complex. One crucial aspect is understanding the reporting requirements of federal agencies such as the IRS. Does your business have to comply, and if so, what must you do? Here are some answers to questions you may have. What is the number of employees before compliance is required? The Affordable Care Act (ACA), enacted in 2010, introduced several employer responsibilities regarding health coverage. Certain employers with 50 or more full-time employees (called “applicable large employers” or ALEs) must use Forms 1094-C and 1095-C to report information about health coverage offers and enrollment for their employees. Specifically, an ALE uses Form 1094-C to report each employee’s...

29 Sep 2024
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Treasury, IRS Issue Additional Guidance on the Alternative Fuel Vehicle Refueling Property Credit

Roger Rossmeisl, CPA
Automotive, Current Events, Small Business Tax Briefs
Treasury, IRS Issue Additional Guidance on the Alternative Vehicle Refueling Property Credit

As reported via IR-2024-240 on 9/18/2024 The Department of Treasury and Internal Revenue Service issued proposed regulations to provide guidance for the Alternative Fuel Vehicle Refueling Property Credit (the tax credit related to the installation of EV chargers). The Inflation Reduction Act amended the credit for qualified alternative fuel vehicle refueling property. The changes apply to qualified alternative fuel vehicle refueling property placed in service after 12/31/2022, and before 01/01/2033. Business vs Non-Business Property Property Subject to Depreciation The credit amount for property not subject to depreciation is 30% of the cost of the qualified property placed in service during the tax year.  The credit is limited to $1,000 per item of non-depreciable property Property Not Subject to Depreciation The credit amount for depreciable property is 6% of the cost of the...

29 Sep 2024
0

2024 Q4 Tax Calendar: Key Deadlines for Businesses and Other Employers

Roger Rossmeisl, CPA
Small Business Tax Briefs
2024 Q4 Tax Calendar: Key Deadlines for Businesses and Other Employers

Here are some of the key tax-related deadlines affecting businesses and other employers during the fourth quarter of 2024. 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. Note: Certain tax-filing and tax-payment deadlines may be postponed for taxpayers who reside in or have a business in a federally declared disaster area. Tuesday, October 1 The last day you can initially set up a SIMPLE IRA plan, provided you (or any predecessor employer) didn’t previously maintain a SIMPLE IRA plan. If you’re a new employer that comes into existence after October 1 of the year, you can establish a SIMPLE IRA plan...

29 Sep 2024
0

Help Ensure Your Partnership or LLC Complies with Tax Law

Roger Rossmeisl, CPA
Small Business Tax Briefs
Help Ensure Your Partnership or LLC Complies with Tax Law

When drafting partnership and LLC operating agreements, various tax issues must be addressed. This is also true of multi-member LLCs that are treated as partnerships for tax purposes. Here are some critical issues to include in your agreement so your business remains in compliance with federal tax law. Identify and describe guaranteed payments to partners For income tax purposes, a guaranteed payment is one made by a partnership that’s: 1) to the partner acting in the capacity of a partner, 2) in exchange for services performed for the partnership or for the use of capital by the partnership, and 3) not dependent on partnership income. Because special income tax rules apply to guaranteed payments, they should be identified and described in a partnership agreement. For instance: The partnership generally deducts guaranteed...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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