Let’s trade! Business bartering is still taxable
Bartering can be a viable way to conduct business, especially if you’re strapped for cash. But you can’t escape tax obligations.
The fair market value of goods or services you receive generally must be reported as taxable income. Business expenses related to the exchange may also be deductible. Special rules apply if you use a barter exchange, including when trade credits are taxable and whether Form 1099-B reporting applies.
Good records are essential, including documentation of the fair market value, invoices, barter agreements and statements from barter exchanges. Whether you already barter or are considering it, contact us to discuss the tax and reporting implications.
Sometimes how much is in tax-deferred retirement accounts may be too much
Could your traditional 401(k) or IRA balance be too large? Maybe!
Contributing as much as you can to tax-deferred retirement accounts can be a good idea. Contributions are pretax or deductible, and tax-deferred compounding can turbocharge growth.
But sometimes maximizing tax deferral is counterproductive. This may be true if tax rates increase by the time you pay tax on distributions. Also, retirement plan distributions are taxed at your ordinary-income rate, not your long-term capital gains rate. So you may pay a higher tax rate on dividends and growth than you would if you held the investments in a taxable account.
Fortunately, there are strategies that can help. Contact us to learn more.
How to avoid and correct common payroll tax mistakes
Payroll administration can be challenging for small business owners — and errors can be costly.
Common trouble spots include incorrect withholding, late tax deposits, and failure to include taxable bonuses, awards or fringe benefits in employees’ wages. Mistakes can happen even with payroll software or an outside payroll provider. Reducing your risk requires two things: formal review procedures to identify problems quickly and prompt action to correct them.
We can help you comply with your payroll tax obligations. Contact us if you discover a payroll error or have questions about the applicable rules.
Educators may be able to claim 2 deductions for 2026 classroom expenses
Teachers and other educators often spend their own money on books, supplies, equipment and other classroom needs. For 2026, eligible educators may have two ways to deduct qualifying unreimbursed expenses: A deduction of up to $350 is available whether or not they itemize, and a new deduction with no dollar cap is available to itemizers. Educators eligible for both deductions can first claim the above-the-line deduction and reap the benefits of reducing their adjusted gross income and, if they have eligible expenses in excess of $350, claim the itemized deduction for those excess expenses. (Educators can’t claim both deductions for the same expenses.) Contact us to see if you may be eligible.
IRS Increases Business Mileage Rate Effective July 1, 2026
The IRS has announced an increase to the standard business mileage rate for the second half of 2026. Beginning July 1, 2026, the rate increases from 72.5 cents per mile to 76 cents per mile for business miles driven. 2026 Business Mileage Rates January 1 – June 30, 2026: 72.5¢ per mile July 1 – […]
How a lockbox (or other) service can benefit accounts receivable
Businesses have long used bank lockbox services to accelerate collections and reduce work involved in processing checks. Now, technology enables lockbox users to automate many accounts receivable procedures. But other electronic payment methods, including ACH and credit cards, may provide less expensive, yet effective, solutions. To determine what makes sense for your organization, evaluate the volume of paper checks you receive. If it’s high, you might benefit from a lockbox service. Otherwise, consider accepting paper checks while steering customers to electronic methods. Talk to your bank about its services, and contact us for help calculating your current payment-processing costs.
Disability benefits may have income tax consequences you don’t expect
Disability insurance is a valuable benefit provided by many employers. It replaces a portion of the insured person’s income — typically 45% to 65% of pre-disability earnings. But in some cases, income taxes can take a bite out of disability benefits.
Taxability usually hinges on who paid the premiums. If your employer paid them, the payouts from the policy generally will be taxed to you just as if the income were paid directly to you by your employer. If you paid the premiums, the payments you receive generally won’t be taxable. State tax treatment of disability benefits varies.
We can help you assess how much disability coverage you need depending on the tax consequences and other factors.
Tax essentials for sole proprietors
Sole proprietors: Are you on top of your federal tax obligations? Even if your business is small, tax compliance and planning are a big deal.
In addition to reporting business income and expenses, you may owe self-employment tax and need to make quarterly estimated payments. You might also need an employer identification number (for example, if you hire employees). State and local income, sales, payroll, and other tax requirements may apply, too. Careful planning can help you maximize deductions and choose the right retirement plan for your situation.
Contact us to learn more about the tax aspects of being a sole proprietor, including the reporting and recordkeeping requirements.
Professional valuations provide businesses with more than a number
A business valuation prepared by a qualified professional can play a critical role in transactions and strategic decisions. These include business sales, M&As, litigation, estate planning and buy-sell agreements. Because valuation professionals analyze a wide range of qualitative and quantitative factors, the process can reveal opportunities to boost performance and maximize return on investment. Understanding key concepts — including fair market value, fair value, going-concern value, and valuation premiums and discounts — helps owners interpret results and make more informed decisions. Contact us to learn more.
Tax tips for parents with kids heading to college this fall
If your child is heading to college this fall, tax breaks may be available. For example, you might be eligible for the American Opportunity Tax Credit (AOTC) of up to $2,500 per student for the first four years of college. But the AOTC is phased out for married joint filers with modified adjusted gross income between $160,000 and $180,000 (between $80,000 and $90,000 for heads of households).
If your child has a tax-advantaged education account, such as a 529 plan, tax-free withdrawals can be taken to pay qualified expenses. But expenses paid with tax-free withdrawals can’t be used to claim the AOTC.
Contact us to discuss these and other tax tips for your situation.
You must be logged in to post a comment.