Since 2003 the IRS has been working to revamp how businesses should account for money spent on buying, making, improving and repairing tangible property. The final regulations were announced in 2014 with an important update made in 2015. Why would such a seemingly arcane tax accounting topic take a decade to finalize? The changes affect over $17 trillion in tangible assets owned by U.S. businesses and may require accounting changes for virtually every company in the country. The new … [Read more...]
2015 income “taxmageddon” breakdown
As IRS commissioner John Koskinen has publicly admitted, the 2014 tax year will be one of the most complicated and stressful to process in the history of the IRS. Last-minute changes to tax credits and deductions, new tax rules relating to the Patient Protection and Affordable Care Act (“Obamacare”) and a reduced IRS budget will create a perfect storm of hot tax mess starting in January. Processing delays – even disappearing returns according to National Taxpayer Advocate Nina Olson – can be … [Read more...]
Tax inversion: How incorporating abroad can lower your tax bill
The United States has one of the highest corporate income tax rates in the world. Multiple studies confirm that even if you take into account credits and deductions, the effective rate (what companies actually pay) continues to be among the highest. Corporate profits between $100,000 and $335,000 are taxed at a 39 percent rate, with higher profit levels taxed between 34 and 38 percent. Add state and local income taxes to the mix and a corporation could pay half of its profits in income taxes. … [Read more...]
Should a small business barter?
Cash is king but what do you do if your business needs something desperately and can’t afford it? Take a cue from the past and barter your way to what you need. Bartering has existed since the beginning of history, where people exchange goods or services. It predates the existence of money and is still used extensively today with billions of dollars worth of time and products changing hands every week. Should a small business barter to pay for what it wants? Should a small business barter … [Read more...]
Small business tax trap catches entreprenuers
Donald and Brenda Fitch learned the hard way that married entrepreneurs have a third partner in their businesses—Uncle Sam. The couple recently lost a tax court battle with the IRS over how much money they owed in self-employment taxes for their respective businesses. Their hard-earned experience provides an important lesson for couples when both spouses are small-business owners. Self-employment taxes are the equivalent of payroll taxes for employed people, with the business owner … [Read more...]
Why Obama’s Budget Proposal Could Increase Small-Business Taxes
President Obama recently presented his federal budget proposalfor fiscal year 2015. The president envisions the government spending $3.901 trillion and collecting $3.337 trillion, leaving a deficit of $564 billion that will be financed by adding to the national debt. Many elements of the new budget have been proposed in previous years by President Obama but weren't approved by Congress and thus were never enacted. The same fate will likely befall most, if not all, of the … [Read more...]
Why The Government Could Get Half Your Business
f you're thinking about selling your company, don't forget your silent partner: Uncle Sam. Here's how to make sure he doesn't walk away with more than you. When you think about selling your business, how much of the sales proceeds do you expect to keep? The Government Could Get Half Your Business. Many owners respond with a common answer: the net proceeds (sales price minus liabilities), forgetting that silent partner Uncle Sam will also expect his cut. Changes in tax laws from the … [Read more...]
Borrow Your Way to a Lower Tax Bill
It's not likely the first thing that comes to mind when looking to lower your taxes, but borrowing money (the right way) can save you thousands. Borrow Your Way to a Lower Tax Bill Taxes are going up. Way up. Starting this year and continuing through 2018, a series of taxes on earned income, investment income, payrolls and certain benefits will increase dramatically. Healthcare reform, the Fiscal Cliff resolution, adjustments for inflation and other factors are the root cause. The net impact … [Read more...]
If You’re in Debt to the IRS, Be Wary
Be careful with tax experts that promise to make your IRS problems go away. One of the scariest types of correspondence that a small-business owner can recieve is a request from the IRS for more information. Debt to the IRS could lead to an audit which requires payment of back taxes, interest and penalties. In some cases, the amounts can reach tens of tousands of dollars or more. If your business is going through a rough patch and can't afford to pay the IRS what is owed, then some people throw … [Read more...]
Lower Tax Rates
Supporters of lower tax rates now think the status quo would be better. For decades, business groups have advocated for lower corporate tax rates. At least a few times a day I hear the common refrain that “the U.S. has one of the highest corporate tax rates in the world.” This statement isn’t false, but it isn’t exactly true either. While U.S. companies may have high marginal tax rates, the reality is that very few businesses actually pay the 35 percent top corporate rate. Deductions, credits … [Read more...]
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