As of Tuesday, April 21st, the Senate has passed the Paycheck Protection Program and Health Care Enhancement Act (PPP & HCE Act), a $484 billion package which will now go to the House of Representatives for consideration. It is anticipated that this bill could pass the House as early as Thursday, and President Trump is expected to sign it into law soon after.
Raising money through Internet crowdfunding sites prompts questions about the taxability of the money raised. A number of sites host money-raising projects for fees ranging from 5 to 9%, including GoFundMe, Kickstarter, and Indiegogo. Each site specifies its own charges, limitations, and withdrawal processes. Whether the money raised is taxable depends upon the purpose of the fundraising campaign.
At their core, tax credits are a very particular type of benefit designed to offset the actual tax liability associated with SMBs around the country. This isn’t the same thing as a tax deduction, which lowers that business’s actual income. Tax credits are typically offered to incentivize everything from hiring more workers in order to stimulate the economy to making meaningful contributions to specific industries.
While certain tax credits are obvious, others are decidedly less so. This is why proper tax planning is essential as a small business owner — you need to be proactive about getting every last penny that is owed to you. There are a number of essential small business tax credits in particular that you’ll definitely want to take advantage of when tax season rolls around.
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As a reminder to those who have not yet filed their 2018 tax returns, April 15, is the due date to either file a return (and pay the taxes owed) or file for an automatic six-month extension (and pay the an estimate of the taxes owed). Caution should be exercised when preparing the extension application, which is IRS Form 4868. Even though this form is described as “automatic,” the extension is automatically granted only if it includes a reasonable estimate of the 2018 tax liability and only if that anticipated liability is paid along with the extension voucher. It is not uncommon for taxpayers to enter zero as the estimated tax liability without figuring the actual estimated amount. These taxpayers risk the IRS classifying their forms as having been improperly completed, which in turn makes the extensions invalid. If you need an extension, please contact this office so that we can prepare a valid extension for you.
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Very few people think that starting a new business is easy. But at the same time, there are few first-time entrepreneurs who realize just how involved things are from the moment you start trying to bring that idea that previously only existed in your head into the real world.
There’s a massive amount of commitment required, even before your business technically exists at all. This is okay, because as the old saying goes, “anything worth doing is worth doing right.”
In fact, there are a number of key steps that you need to take BEFORE you’ve even started the business of your dreams that you’ll absolutely want to pay close attention to moving forward.
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A taxpayer who is in the business of providing family day care in their home may deduct the ordinary and necessary expenses of their business. The two primary deductions include the business use of their home and the cost of providing meals and snacks to children in their care. The following is a rundown on deductible business expenses for home day care providers.
Business Use of the Home – Generally, to be able to take a deduction for business use of the home, the tax law requires the business portion to be used exclusively for business. However, the tax law carves out a special allowance for day care facilities, allowing prorated use.
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Some of the major provisions of last year’s tax reform legislation were the many benefits provided for businesses, including cutting the C corporation tax rate to 21%. Not to leave out other forms of business, the bill also included what was termed the 20% pass-through deduction that applies to sole proprietorships, partnerships, s-corporations and the like. The short-hand title for this tax benefit is the Sec 199A deduction, and it is one of the more complicated pieces of tax legislation ever conceived by Congress. So complicated in fact that the legislation left a lot of unanswered questions, and for the most part the tax preparation community has sat back and waited for the IRS to release regulations, hoping they would explain the many grey areas of this new deduction.
The Treasury Department and the IRS finally released the 184 page proposed regulationson August 8, 2018, explaining how they interpret and propose to apply the provisions and limitations included in the legislation. The regulations are “proposed” and the IRS is asking for feedback from stakeholders. So these are not the “final” regulations and have left some unanswered questions.
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As the end of the year is getting close, this is a reminder that Sunday, December 31, is the last day that you can make a tax-deductible purchase, pay a tax-deductible expense, make a tax-deductible charitable contribution, or pay tax-credit-qualifying tuition or expenses for 2017.
The individual retirement account (IRA) is one of the favored ways to save money for retirement. There are two types of IRAs: the traditional IRA and the Roth IRA. The annual maximum that an individual can be contributing between the two types of IRAs is $5,500, unless the individual is 50 years of age or older, and then the maximum is increased to $6,500. The basic contribution amount is inflation adjusted annually and the amount quoted is for 2017, while the additional amount for those 50 and older is fixed at $1,000. Contributions to an IRA may or may not be tax deductible depending on the type of IRA and, in some cases, the amount of the taxpayer’s income for the contribution year and whether the taxpayer participates in an employer’s retirement plan.
Taxpayers are often confused by the differences in tax treatment between businesses that are entered into for profit and those that are not, commonly referred to as hobbies. We cover the differences in this week’s article and how it might apply to your small business.