2019 Standard Mileage Rates Announced

The Internal Revenue Service (IRS) computes standard mileage rates for business, medical and moving each year, based on a number of factors, to determine the standard mileage rates for the following year.

As it does annually around the end of the year, the IRS has announced the 2019 optional standard mileage rates. Thus, beginning on Jan. 1, 2019, the standard mileage rates for the use of a car (or a van, pickup or panel truck) are:

10 Ways to Improve Profits in the Coming Year

As a small business owner, this is the time to take a closer look at your profit and loss sheets to determine how you can make the most out of this current economy.  In the U.S., the economy is thriving and expected to grow over the next few months.  Businesses are expanding.  The Federal Reserve has inched up interest rates, creating investment opportunities, and lenders are offering small business loans.  All of this points to a promising outlook for the coming months.

Wonder What a Tax Deduction Is Worth?

Because individuals are always looking for tax deductions that can reduce their tax liability it’s important to know what the actual tax benefit is derived from a tax deduction.  There is no straightforward answer because some deductions are above the line, others must be itemized, some must exceed a threshold amount before being deductible, and certain ones are not deductible for alternative minimum tax purposes, while business deductions can offset both income and self-employment tax.  In other words, there are many factors to consider, and the tax benefits differ for each individual, depending on his or her particular situation and tax bracket.

Will You Get a Refund or Owe for 2018?

Adjustments to Withholding or Estimated Payments for 2018 Should Be Made Sooner Rather than Later

As a result of tax reform, most taxpayers will be paying less tax for 2018 than they did in 2017.  But that may not translate into a larger refund.  Your refund is the amount that your pre-payments (withheld income tax, estimated tax payments, and certain credits) exceed your tax liability, and if the pre-payment also got reduced, you could be in for an unpleasant surprise at tax time. 

The Most Common IRS Tax Problems

One of the most bone-chilling situations an American taxpayer can experience is receiving notification from the Internal Revenue Service that there’s some kind of problem.  Just receiving an envelope with a return address from the IRS can strike fear.  There are many different reasons that the IRS might reach out, but some are more common than others.

Here are the top issues that would cause a taxpayer to hear from the IRS or require you to resolve an issue:

Reasonable Compensation and S Corporations

Unlike a C corporation, which itself pays the tax on its taxable income, an S corporation does not directly pay taxes on its income; instead, its income, losses, deductions, and credits are distributed across its shareholders’ individual tax returns on a pro rata basis.  These distributions are not subject to self-employment (Social Security and Medicare) taxes.  As a result, many S corporations ignore the requirement that each shareholder-employee must take reasonable compensation in the form of W-2 wages in exchange for services performed for the corporation.  These wages are subject to Social Security and Medicare taxes (which the corporation and the employee generally split equally); the corporation is also responsible for paying the Federal Unemployment Tax (as well as any state unemployment taxes).

An Overview on Tax-Deferred Investing

There are many ways to save money for your retirement or children’s future education such as investing in the stock market, buying real estate for income and appreciation or simply putting money away in education savings accounts or retirement plans.

Keeping in mind how these various savings vehicles are taxed is important for choosing the ones best suited to your particular circumstances. Let’s begin by examining the tax nuances of IRA accounts.

After Tax Reform, Which Is Right for You: S Corp or C Corp?

The Tax Cuts and Jobs Act has left many of today’s businesses with big questions.  Incorporation remains a hot topic, but this law is shaking things up.  It’s quick to assume your company should be one or the other, but without careful consideration of the facts, your organization may end up facing financial loss, hefty tax penalties or missed tax savings.

The goal of this type of incorporation is to minimize tax burdens, but the wrong decision can be costly.  In a C Corp, the company pays corporate taxes to the Internal Revenue Service.  But, in an S Corp, there’s no entity tax.  Rather, taxes are paid through an individual return.

Tax Reform 2.0 – Stay Tuned

Another Round of Tax Changes Under Consideration

The dust has not yet settled from the Tax Cuts and Jobs Act (TCJA), passed into law in December 2017, and the House Ways and Means Committee is already considering another round of tax changes.  The committee chair, Kevin Brady, Republican from Texas, wants to include input from stakeholders such as business groups, think tanks and other relevant organizations.  Historically, major tax reforms have been decades apart, so the committee chair is looking for another approach to the way Washington deals with tax policy.