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...

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%....

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)...

05 Feb 2023
0

Employers Should be Wary of ERTC Claims that are Too Good to be True

Roger Rossmeisl, CPA
Small Business Tax Briefs
Employers Should be Wary of ERTC Claims that are Too Good to be True

The Employee Retention Tax Credit (ERTC) was a valuable tax credit that helped employers that kept workers on staff during the height of the COVID-19 pandemic. While the credit is no longer available, eligible employers that haven’t yet claimed it might still be able to do so by filing amended payroll returns for tax years 2020 and 2021. However, the IRS is warning employers to beware of third parties that may be advising them to claim the ERTC when they don’t qualify. Some third-party “ERTC mills” are promising that they can get businesses a refund without knowing anything about the employers’ situations. They’re sending emails, letters and voice mails as well as advertising on television. When businesses respond, these ERTC mills are claiming many improper write-offs...

05 Feb 2023
0

The Standard Business Mileage Rate is Going Up in 2023

Roger Rossmeisl, CPA
Small Business Tax Briefs
The Standard Business Mileage Rate is Going Up in 2023

Although the national price of gas is a bit lower than it was a year ago, the optional standard mileage rate used to calculate the deductible cost of operating an automobile for business will be going up in 2023. The IRS recently announced that the 2023 cents-per-mile rate for the business use of a car, van, pickup or panel truck is 65.5 cents. These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles. In 2022, the business cents-per-mile rate for the second half of the year (July 1 – December 31) was 62.5 cents per mile, and for the first half of the year (January 1 – June 30), it was 58.5 cents per mile. How rate calculations are done The 3-cent increase...

12 Jan 2023
0

California Storm Victims Qualify for Extended Tax Filing Deadlines

Roger Rossmeisl, CPA
Automotive, Current Events, Individual Tax Briefs, Small Business Tax Briefs
California Storm Victims Qualify for Extended Tax Filing Deadlines

On January 10, 2023, IRS news release IR-2023-03 announced that California storm victims now have until May 15, 2023, to file various federal individual and business tax returns and make tax payments.   The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). This means that individuals and households that reside or have a business in Alameda, Colusa, Contra Costa, El Dorado, Fresno, Glenn, Humboldt, Kings, Lake, Los Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Mono, Monterey, Napa, Orange, Placer, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Francisco, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Stanislaus, Sutter, Tehama, Tulare, Ventura, Yolo and Yuba counties qualify for tax relief.   On January 11, 2023, the...

04 Jan 2023
0

How to Minimize the S Corporation LIFO Recapture Tax

Roger Rossmeisl, CPA
Automotive, Small Business Tax Briefs
How to Minimize the S Corporation LIFO Recapture Tax

If you’re considering converting your C corporation to an S corporation, be aware that there may be tax implications if you’ve been using the last in, first out (LIFO) inventory method. That’s because of the LIFO recapture income that will be triggered by converting to S corporation status. Consider computing in advance what the tax on this recapture would be and to see what planning steps might be taken to minimize it. Inventory reporting As you’re aware, your corporation has been reporting a lower amount of taxable income under LIFO than it would have under the first in, first out (FIFO) method. The reason: The inventory taken into account in calculating the cost of goods sold under LIFO reflects current costs, which are usually higher. This benefit of...

02 Jan 2023
0

2023 Q1 Tax Deadlines for Businesses and Other Employees

Roger Rossmeisl, CPA
Small Business Tax Briefs
2023 Q1 Tax Deadlines for Businesses and Other Employees

Here are some of the key tax-related deadlines affecting businesses and other employers during the first quarter of 2023. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. If you have questions about filing requirements, contact us. We can ensure you’re meeting all applicable deadlines. January 17 (The usual deadline of January 15 is on a Sunday and January 16 is a federal holiday) Pay the final installment of 2022 estimated tax. Farmers and fishermen: Pay estimated tax for 2022. If you don’t pay your estimated tax by January 17, you must file your 2022 return and pay all tax due by March 1, 2023, to avoid an estimated tax penalty. January 31 File 2022 Forms W-2, “Wage...

01 Jan 2023
0

Do you Qualify for the QBI Deduction and What Can you Do to Help Qualify?

Roger Rossmeisl, CPA
Small Business Tax Briefs
Do you Qualify for the QBI Deduction and What Can you Do to Help Qualify?

If you own a business, you may wonder if you’re eligible to take the qualified business income (QBI) deduction. Sometimes this is referred to as the pass-through deduction or the Section 199A deduction. The QBI deduction is: Available to owners of sole proprietorships, single member limited liability companies (LLCs), partnerships, and S corporations, as well as trusts and estates. Intended to reduce the tax rate on QBI to a rate that’s closer to the corporate tax rate. Taken “below the line.” In other words, it reduces your taxable income but not your adjusted gross income. Available regardless of whether you itemize deductions or take the standard deduction. Taxpayers other than corporations may be entitled to a deduction of up to 20% of their QBI. For 2022, if...

15 Dec 2022
0

Worker Classification 101: Employee or Independent Contractor

Roger Rossmeisl, CPA
Small Business Tax Briefs
Worker Classification 101: Employee or Independent Contractor

As posted to IRS.gov as Tax Tip 2022-117 on 8/2/2022 A business might pay an independent contractor and an employee for the same or similar work, but there are key legal differences between the two. It is critical for business owners to correctly determine whether the people providing services are employees or independent contractors. An employee is generally considered anyone who performs services, if the business can control what will be done and how it will be done. What matters is that the business has the right to control the details of how the worker's services are performed. Independent contractors are normally people in an independent trade, business or profession in which they offer their services to the public. Independent contractor vs. employee Whether a worker is an independent...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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