There’s a deduction for student loan interest … but do you qualify for it?
If you’re paying back college loans for yourself or your children, you may wonder if you can deduct the interest you pay on the loans. The answer is yes, subject to certain limits. The maximum amount of student loan interest you can deduct each year is $2,500. Unfortunately, the deduction is phased out if your […]
2022 Q1 tax calendar: Key deadlines for businesses and other employers
Here are a few key tax-related deadlines for businesses during Q1 of 2022. JAN. 17: Pay the final installment of 2021 estimated tax. JAN. 31: File 2021 Forms W-2 with the Social Security Administration and provide copies to employees. Also provide copies of 2021 Forms 1099-MISC to recipients and, if reporting nonemployee compensation in Box 7, file, too. FEB. 28: File 2021 Forms 1099-MISC if not required earlier and paper filing. MARCH 15: If a calendar-year partnership or S corp., file or extend your 2021 tax return. Contact us to learn more about filing requirements and ensure you’re meeting all applicable deadlines.
Providing a company car? Here’s how taxes are handled
The use of a company car is a valuable fringe benefit for business owners and key employees. This perk results in tax deductions for the employer and tax breaks for the owners and employees using the cars. (And of course, they get the nontax benefit of getting a company car.) For tax deduction purposes, a business will treat the car much the same way it would any other business asset. Providing an auto for an owner or key employee comes with complications and paperwork. Personal use will have to be tracked and valued under the fringe benefit tax rules and treated as income. We can help you stay in compliance with the rules and explain more about this prized perk.
Stock market investors: Year-end tax strategies to consider
Year-end is a good time to plan to save taxes by structuring your capital gains and losses. Consider some possibilities. For example, suppose you lost money this year on some stock and have other stock that has appreciated. Consider selling appreciated assets before Dec. 31 (if you think the value has peaked) and offset gains with losses. Long-term capital losses offset long-term capital gains before they offset short-term gains. Similarly, short-term capital losses offset short-term capital gains before they offset long-term gains. You may generally use up to $3,000 of capital losses in excess of total capital gains as a deduction against ordinary income in computing adjusted gross income.
Helping your employees make the most of email
For many people, email has become an afterthought. This can cause problems for businesses in lost productivity, lower morale and even unhappy customers. Here are some email management tips to address with staff: 1) Set up project-specific folders to stay better organized. 2) Regularly check junk email folders and adjust the filters so legitimate messages aren’t missed. 3) Encourage employees to unsubscribe from e-newsletters and other messages they’re no longer reading. 4) Refine distribution lists to better target recipients; delete obsolete lists. 5) Establish specified times during the workday to check email. 6) Consider company policies for how quickly employees should respond to emails.
How are court awards and out-of-court settlements taxed?
Awards and settlements are paid for many reasons. For example, a person could receive payments for personal injury or discrimination. By law, individuals can exclude from gross income damages that are received on account of personal physical injury or physical sickness. For purposes of this exclusion, emotional distress isn’t considered physical injury or sickness. So, for example, an award under state law that’s meant to compensate for emotional distress caused by age discrimination would have to be included in gross income. However, if you require medical care for treating the consequences of emotional distress, the amount of damages not exceeding those expenses would be excludable.
The tax implications of owning a corporate aircraft
If your business is successful and you do a lot of business travel, you may have considered buying a corporate aircraft. There are tax and non-tax implications for aircraft ownership. In most cases, if your company buys a plane used only for business, the company can deduct its entire cost in the year that it’s placed into service. The aircraft is ineligible for this immediate write-off when: 1) neither the 100% bonus depreciation rules nor the Section 179 small business expensing rules apply or 2) the taxpayer has elected out of 100% bonus depreciation and hasn’t made the election to apply Sec. 179 expensing. Other rules and limits apply in certain situations. Contact us to learn more.
Could an FLP fit into your succession plan?
Succession planning is critical for business owners. From a tax perspective, the optimal time to start transferring ownership to the next generation is long before retirement. Creating a family limited partnership (FLP) can allow you to gradually transfer ownership while you continue to run the business. To establish one, you transfer ownership interests to a partnership in exchange for both general and limited interests. You retain the general partnership interest, so you stay in charge of your company, while children or other beneficiaries become limited partners. FLPs offer both estate planning and tax-planning benefits, but the IRS scrutinizes them. Contact us for more information.
Use change management to brighten your company’s future
Businesses have had to grapple with many changes over the last couple years, with more likely in store in 2022. When a company implements change, the process is rarely easy. Some employees might think it compromises their job security or status. Others could distrust the motives behind the change, a particularly dangerous mindset. Meanwhile, you and your leadership team may quickly grow frustrated and tighten enforcement of new rules. But doing so often reduces productivity, worsens morale and increases turnover. To change successfully, learn about change management. It can help you communicate more effectively and provide employees with the support needed to change successfully.
With year-end approaching, 3 ideas that may help cut your tax bill
You may still have time to trim your 2021 federal tax liability by taking certain steps. For example, contribute the maximum to your retirement plans, including traditional IRAs and SEP plans. Another idea: If you make your Jan. 2022 mortgage payment in December, you can deduct the interest portion on your 2021 tax return (assuming you itemize deductions on your tax return). You can also “harvest” any investment losses by Dec. 31. If you have more losses than gains, you generally can apply up to $3,000 of the excess to reduce your ordinary income. Any remaining losses are carried forward to future tax years. Contact us if you want to discuss ways to minimize your 2021 tax liability.
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