Employers have questions and concerns about deferring employees’ Social Security taxes
- ByPolk & Associates
- Sep, 10, 2020
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The IRS has issued guidance to employers about the presidential action to allow employers to defer certain payroll taxes. Notice 2020-65 was issued to implement President Trump’s executive memo signed Aug. 8. The deferral involves wages or compensation paid to an employee beginning Sept. 1, 2020, and ending Dec. 31, 2020, but only if the amount paid for a biweekly pay period is less than $4,000, or an equivalent amount in other pay periods. The guidance postpones the withholding and remittance of the employee share of Social Security tax until the period beginning Jan. 1, 2021, and ending April 30, 2021. Penalties, interest and additions to tax will begin to accrue on May 1, 2021.
Homebuyers: Can you deduct seller-paid points?
- ByPolk & Associates
- Sep, 10, 2020
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Despite the pandemic, the National Association of Realtors reports that existing home sales and prices are up nationwide, compared with last year. If you’re a homebuyer, you may wonder if you can deduct mortgage points paid on your behalf by the seller. Yes, you can, subject to some important limitations. For example, the rule allowing a deduction for seller-paid points doesn’t apply to points that are allocated to the part of a mortgage above $750,000 ($375,000 for marrieds filing separately) for tax years 2018 through 2025 (above $1 million for tax years before 2018 and after 2025). It also doesn’t apply to points on a loan used to improve (rather than buy) a home and in other situations.
Back-to-school tax breaks on the books
- ByPolk & Associates
- Sep, 02, 2020
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Despite the COVID-19 pandemic, students are going back to school this fall, either remotely, in-person or a combination. In any event, parents may be eligible for certain tax breaks to help defray the cost of education. For example, with the American Opportunity Tax Credit (AOTC), you can save a maximum of $2,500 for each full-time college or grad school student. This applies to qualified expenses including tuition, room and board, books and computer equipment and other supplies. But the credit is phased out for moderate-to-upper income taxpayers. This is only one of the tax breaks available for education. Contact us for assistance in your situation.
ESOPs offer businesses a variety of potential benefits
- ByPolk & Associates
- Sep, 02, 2020
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Wouldn’t it be great if your employees worked as if they owned the company? An employee stock ownership plan (ESOP) could make this a reality. Under an ESOP, employees take part ownership of the business through a retirement savings arrangement. Among the biggest benefits for employers, along with having an extra-motivated workforce, is that contributions to qualified retirement plans such as ESOPs are typically tax-deductible. The company can also benefit from a clearer path to a smooth succession. There are some risks, however, including complexity of setup and administration, and a strain on cash flow in some situations. Please contact us to discuss further.
5 key points about bonus depreciation
- ByPolk & Associates
- Sep, 02, 2020
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You’re probably aware of the 100% bonus depreciation tax break that’s available for a wide variety of qualifying property. There are some important points to be aware of when it comes to this powerful tax-saving tool. For example, bonus depreciation is available for new and most used property. And it’s scheduled to phase out. Under current law, 100% bonus depreciation will generally be phased out in steps. An 80% rate will apply to property placed in service in 2023, 60% in 2024, 40% in 2025, and 20% in 2026, and a 0% rate will apply in 2027 and later years. Asset depreciation can be a complex area of tax law. Contact us with questions about your situation.