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Tax Blog

Own an S-Corp? Are you paying yourself correctly?

If you operate your business as an S corporation and pay yourself on a 1099-MISC, then you’re possibly in violation of tax law, which can subject you to substantial tax liabilities and penalties. The law requires you to pay yourself a salary for the work you do for the corporation. Your salary should be reasonable based upon your position, hours worked, and duties performed. It should also be equivalent to executives or employees in similar businesses. The salary shouldn’t be in the form of distributions or 1099 payments. The payments should be run through payroll to ensure the proper income...


4th Quarter 2018 Due Dates

Here are the upcoming tax due dates for the 4th quarter of 2018! October 1 Deadline for businesses to establish a new SIMPLE retirement plan for 2018 Deadline for businesses to provide written notice to employees related to Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) plans that begin on January 1, 2019 October 15 Deadline for individuals to file their 2017 1040 if on an extension 2017 Form 1120 due for Calendar-year C-Corps if on an extension October 31 Form 941 for 3rd Quarter 2018 due for Employers November Employers request Form W-4s from employees whose withholding allowances will be...


Postcard-size Form 1040 is coming!

The Internal Revenue Service and the Treasury Department unveiled a draft version of the postcard-size Form 1040 that was promised from last year’s tax reform effort. For the 2019 tax season, the shorter Form 1040 will replace current Forms 1040, 1040A and 1040EZ so that all 150 million taxpayers can use the same form. The new form uses a “building block” approach, in which the tax return is reduced to a simple form and supplemented with additional schedules if needed. Taxpayers with straightforward tax situations will only need to file this new 1040 with no additional schedules. Padgett was represented...


Are Your Earnings Subject to Self-Employment Tax?

Self-employed persons are subject to a special tax to fund social security benefits under the SelfEmployment Contributions Act. All self-employed persons, regardless of age, must file Schedule SE to compute the tax. For sole proprietors, SE tax is assessed on net earnings from self-employment, which is defined as gross income less allowable deductions from a taxpayer’s trade or business. Trade or Business Requirement. To be engaged in a trade or business generally requires your continuous and regular involvement in the activity and the intent of making a profit. Thus, earned income received from an isolated or sporadic activity that differs...


Some Tips on Small Business Financing

Financing can be one of the biggest obstacles small business owners face. Proper financing can help your business survive, grow or expand and increase profits. The alternative can be as severe as business failure. A small business’ primary use of a commercial finance company is to borrow money for the purchase of inventory and equipment, and to meet seasonal cash flow needs. A trustworthy financier can be an asset to any small business. While right now may be the perfect time to apply for a loan to purchase more equipment, finding a good lender may prove to be challenging. When...


Networking for Small Business

When it comes to any small business, networking is the key to success. With the explosion of online marketing and social media, business owners can easily replace face-to-face networking with more time online. Although online is still important for business growth, person-to-person networking will build solid relationships that every entrepreneur can benefit from. Many business owners avoid networking because they’re tired of hearing the same sales pitch, they don’t see the benefit, or they don’t know where to find networking events. If you find yourself falling into one of the above categories, there is no need to worry. Below are...


Tax Code Complexities from the 2018 Tax Reform Law

While the Tax Cuts and Jobs Act (TCJA) sought to simplify the tax code, it also brought new complexity. For example, a new deduction provides substantial tax savings to people with “qualified business income” (QBI) from their pass-through business but calculating the deduction and limitations is complicated. Generally, the QBI deduction is 20% of qualified income from a partnership, S corporation, or sole proprietorship. QBI, in a nutshell, is the net amount of income, gain, deduction, and loss with respect to your trade or business. Although we have a framework for the QBI calculation, we still await IRS guidance and...


Tax Deductible Vacations

Although technology has revolutionized the way we do business, there are still situations where it’s necessary for a face-to-face meeting with staff, management, or customers. With a little planning for the current vacation season, you can mix some leisure time in with your business travel and still get a tax deduction. Deductible Travel Expenses — If your trip within the U.S. was primarily for business and, while at your business destination, you extended your stay for a vacation, made a side trip, or had other personal activities, you can deduct only your business-related travel expenses. It’s important to keep records...


Employing Youth

Each June, millions of youth begin their search for a summer job. Before hiring any summertime help, it’s a good idea to be aware of the Federal and State laws governing youth in the workplace. The Fair Labor Standards Act (FLSA) youth employment provisions are designed to protect young workers by limiting the types of jobs and the number of hours they may work, based on the age of the minor. The following provisions apply to nonagricultural occupations: 18 Years of Age. Once a youth reaches 18, the Federal child labor provisions no longer apply to them – they can...


Are You Ready for 2018?

Now that you’ve filed your 2017 tax return (or at least filed an extension), it’s time to consider what your 2018 return will look like. Many provisions of the Tax Cuts and Jobs Act take effect in 2018 and could impact your return. Many taxpayers have already seen an increase in their paycheck for the revised withholding schedules, but what else should you be prepared for? For starters, the standard deduction has nearly doubled to $24,000 for married taxpayers filing jointly, $18,000 for heads of household, and $12,000 for all other individuals. The additional standard deduction for elderly and blind...