Small Business Tax Briefs Archives - Page 30 of 37

22 Jun 2020

CARES Act Liberalizes NOLs

The Coronavirus Aid, Relief, and Economic Security (CARES) Act eliminates some of the tax-revenue-generating provisions included in a previous tax law. Here’s a look at how the CARES Act liberalizes NOLs, providing businesses with relief from the novel coronavirus (COVID-19) crisis. NOL deductions Basically, you may be able to benefit by carrying a net operating loss (NOL) into a different year — a year in which you have taxable income — and taking a deduction for it against that year’s income. The CARES Act includes favorable changes to the rules for deducting NOLs. First, it permanently eases the taxable income limitation on deductions. Under an unfavorable provision included in the Tax Cuts and Jobs Act (TCJA), an NOL arising in a tax year beginning in 2018 and later...

18 Jun 2020

Are Your Independent Contractors Properly Classified?

Roger Rossmeisl, CPA

Small Business Tax Briefs

Are your independent contractors properly classified

As a result of the coronavirus (COVID-19) crisis, your business may be using independent contractors to keep costs low. That said, are your independent contractors properly classified for federal tax purposes? If the IRS reclassifies them as employees, it can be an expensive mistake. The question of whether a worker is an independent contractor or an employee for federal income and employment tax purposes is a complex one. If a worker is an employee, your company must withhold federal income and payroll taxes, pay the employer’s share of FICA taxes on the wages, plus FUTA tax. Often, a business must also provide the worker with the fringe benefits that it makes available to other employees. And there may be state tax obligations as well. These obligations don’t...

11 Jun 2020

Favorable Tax Changes to “Qualified Improvement Property”

Roger Rossmeisl, CPA

Small Business Tax Briefs

Favorable Tax Changes to Qualified Improvement Property

The law providing relief due to the coronavirus (COVID-19) pandemic contains a beneficial change in the tax rules for many improvements to interior parts of nonresidential buildings. This is referred to as qualified improvement property (QIP). You may recall that under the Tax Cuts and Jobs Act (TCJA), any QIP placed in service after December 31, 2017 wasn’t considered to be eligible for 100% bonus depreciation. Therefore, the cost of QIP had to be deducted over a 39-year period rather than entirely in the year the QIP was placed in service. This was due to an inadvertent drafting mistake made by Congress. But the error is now fixed. The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020...

11 Jun 2020

Rioting Damage at Your Business?

Roger Rossmeisl, CPA

Small Business Tax Briefs

Rioting damage at your business? The recent riots around the country have resulted in many storefronts, office buildings and business properties being destroyed. In the case of stores or other businesses with inventory, some of these businesses lost products after looters ransacked their property. Windows were smashed, property was vandalized, and some buildings were burned to the ground. This damage was especially devastating because businesses were reopening after the COVID-19 pandemic eased. A commercial insurance property policy should generally cover some, or all, of the losses. (You may also have a business interruption policy that covers losses for the time you need to close or limit hours due to rioting and vandalism.) But a business may also be able to claim casualty property loss or theft...

07 Jun 2020

New Employer Tax Credits Flowchart

Roger Rossmeisl, CPA

Small Business Tax Briefs

Many businesses that have been severaly impacted by the coronavirus (COVID-19) will qualify for two new employer tax credits - the Credit for Sick and Family Leave and the Employee Retention Credit. Sick and Family Leave Credit for Sick and Family Leave An employee who is unable to work (including telework) because of coronavirus quarantine or self-quarantine or has coronavirus symptoms and is seeking a medical diagnosis, is entitled to paid sick leave for up to ten days (up to 80 hours) at the employee’s regular rate of pay, or, if higher, the Federal minimum wage or any applicable State or local minimum wage, up to $511 per day, but no more than $5,110 in total. Caring for someone with Coronavirus An employee who is unable to work due to...

03 Jun 2020

Setting Up a SEP Plan for 2019

Roger Rossmeisl, CPA

Small Business Tax Briefs

Do you own a business but haven’t gotten around to setting up a tax-advantaged retirement plan? Fortunately, it’s not too late for setting up a SEP Plan for 2019 and reducing your 2019 tax bill. A Simplified Employee Pension (SEP) can still be set up for 2019, and you can make contributions to it that you can deduct on your 2019 income tax return. Even better, SEPs keep administrative costs low. Deadlines for contributions A SEP can be set up as late as the due date (including extensions) of your income tax return for the tax year for which the SEP first applies. That means you can establish a SEP for 2019 in 2020 as long as you do it before your 2019 return filing deadline. You...

03 Jun 2020

Determining a Reasonable Salary for a C Corporation Business Owner

Roger Rossmeisl, CPA

Small Business Tax Briefs

Determining a Reasonable Salary for a C Corporation Business Owner

If you’re the owner of an incorporated business, you probably know that there’s a tax advantage to taking money out of a C corporation as compensation rather than as dividends. The reason is simple. A corporation can deduct the salaries and bonuses that it pays executives, but not its dividend payments. Therefore, if funds are withdrawn as dividends, they’re taxed twice, once to the corporation and once to the recipient. Money paid out as compensation is taxed only once, to the employee who receives it. However, there’s a limit on how much money you can take out of the corporation this way. Under tax law, compensation can be deducted only to the extent that it’s reasonable. Any unreasonable portion isn’t deductible and, if paid to a...

25 May 2020

WOTC Extended Through 2020

Roger Rossmeisl, CPA

Small Business Tax Briefs

If you’re a business owner, be aware that a recent tax law extended a credit for hiring individuals from one or more targeted groups. Employers can qualify for a valuable tax credit known as the Work Opportunity Tax Credit (WOTC). The WOTC was set to expire on December 31, 2019. But a new law passed late last year sees WOTC extended through 2020. Generally, an employer is eligible for the credit for qualified wages paid to qualified members of these targeted groups: members of families receiving assistance under the Temporary Assistance for Needy Families program, veterans, ex-felons, designated community residents, vocational rehabilitation referrals, summer youth employees, members of families in the Supplemental Nutritional Assistance Program, qualified Supplemental Security Income recipients, long-term family assistance recipients, and long-term unemployed...

19 May 2020

PPP Loan Forgiven Expenses Aren’t Deductible

Roger Rossmeisl, CPA

Small Business Tax Briefs

Did you know that PPP loan forgiven expenses aren't deductible? The IRS has issued guidance clarifying that certain deductions aren’t allowed if a business has received a Paycheck Protection Program (PPP) loan. Specifically, an expense isn’t deductible if both: The payment of the expense results in forgiveness of a loan made under the PPP, and The income associated with the forgiveness is excluded from gross income under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. PPP basics The CARES Act allows a recipient of a PPP loan to use the proceeds to pay payroll costs, certain employee healthcare benefits, mortgage interest, rent, utilities and interest on other existing debt obligations. A recipient of a covered loan can receive forgiveness of the loan in an amount equal to...

08 May 2020

Amending Returns for Retroactive COVID-19 Tax Relief

Roger Rossmeisl, CPA

Small Business Tax Briefs

Amending Returns for Retroactive COVID-19 Tax Relief

The $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act) delivers meaningful tax relief to individuals and businesses. Some of that relief is retroactive, which can affect 2018 and 2019 returns that have already been filed. One retroactive provision can, in some cases, go all the way back to 2013. Here is a summary of the CARES Act retroactive COVID-19 tax relief measures that can potentially benefit you or your business entity after amended returns have been prepared and filed. Taxpayer-friendly Rules for Deducting Net Operating Losses (NOLs) Business activities that generate tax losses can cause you or your business entity to have an NOL for the year. The CARES Act significantly liberalizes the NOL deduction rules and allows NOLs that arise in 2018–2020 to be...

CARES Act Liberalizes NOLs

Are Your Independent Contractors Properly Classified?

Favorable Tax Changes to “Qualified Improvement Property”

Rioting Damage at Your Business?

New Employer Tax Credits Flowchart

Setting Up a SEP Plan for 2019

Determining a Reasonable Salary for a C Corporation Business Owner

WOTC Extended Through 2020

PPP Loan Forgiven Expenses Aren’t Deductible

Amending Returns for Retroactive COVID-19 Tax Relief

ROGER ROSSMEISL, CPA

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