The Restaurant Revitalization Fund is now live
The COVID-19 pandemic has affected various industries in very different ways. Widespread lockdowns and discouraged movement have led to increased profitability for some manufacturers and many big-box retailers. The restaurant industry, however, has had a much harder go of it — especially smaller, privately owned businesses in economically challenged areas. In response, the Small Business […]
Tax filing deadline is coming up: What to do if you need more time
This year, the deadline for filing 2020 individual tax returns is May 17, 2021. The April 15 due date was postponed due to the pandemic. If you still aren’t ready to file, request a tax-filing extension. Anyone can request an automatic extension with IRS Form 4868. This extends the filing deadline until Oct. 15, 2021. Be aware that a filing extension doesn’t grant you an extension of time to pay your taxes. You need to estimate and pay any taxes owed by the deadline to help avoid possible penalties. In some special situations, people can receive more time without filing Form 4868. This includes victims of certain disaster victims, military members in a combat zone and U.S. citizens abroad.
Providing education assistance to employees? Follow these rules
Many businesses provide education fringe benefits so their employees can improve their skills and gain knowledge. An employee can receive, on a tax-free basis, up to $5,250 each year from an employer for education under a “qualified educational assistance program.” For this purpose, education means any instruction or training that improves or develops an individual’s capabilities. It doesn’t matter if it’s job-related or part of a degree program. Different rules apply if the education is job-related. In addition to education assistance, some employers offer student loan repayment assistance. Contact us to learn more about setting up an education assistance or student loan repayment plan.
Is your wellness program built on a solid foundation?
In a society increasingly conscious of well-being, many businesses have established or are considering offering an employee wellness program. To fulfill objectives such as reducing absenteeism and controlling benefits costs, your company must build such a program on a solid foundation. First, be sure you have total leadership commitment. Successful wellness programs are driven by total management buy-in, from the C-suite down through middle management to leaders in every department. Second, a wellness program needs to be a natural and appropriate extension of your company’s existing culture. Look to patiently and persistently create a “culture of wellness.” Contact us for more info.
Why it’s important to meet the tax return filing and payment deadlines
The May 17 deadline for filing your 2020 individual tax return is coming up. It’s important to file and pay your tax return on time to avoid penalties imposed by the IRS. Here are the basic rules. Separate penalties apply for failing to pay and failing to file. The failure-to-pay penalty is 1/2% for each month (or partial month) the payment is late. The maximum penalty is 25%. The failure-to-file penalty is a more severe rate of 5% per month (or partial month) to a maximum of 25%. If you obtain an extension to file (until Oct. 15), you’re not filing late unless you miss the extended due date. However, a filing extension doesn’t apply to your responsibility to pay. Contact us with questions.
Claiming the business energy credit for using alternative energy
Are you wondering whether alternative energy technologies can help you manage energy costs in your business? If so, there’s a valuable federal income tax benefit (the business energy credit) that applies to the acquisition of many types of alternative energy property. The credit is available for the construction of certain property including equipment that uses solar energy to generate electricity for heating and cooling and certain small wind energy property. The credit amount is limited and based on when construction begins. Of course, there are business considerations unrelated to the tax benefits that may influence your decision to use alternative energy. We can help assess your options.
Ensure competitive intelligence efforts are helpful, not harmful
Competitive intelligence can be formally defined as the gathering and analysis of publicly available information about one or more business competitors. The practice has been around for decades but is easier than ever because of the Internet. The key is to engage in competitive intelligence legally and ethically. Best practices include: 1) Knowing the legal rules and risks; consult an attorney and beware of intellectual property laws, 2) Vet industry sources carefully to avoid violating confidentiality or non-compete agreements, 3) Don’t hide behind secret identities online, and 4) Establish a sound policy and train employees and consultants to follow it. Contact us for more information.
Unemployed last year? Buying health insurance this year? You may benefit from favorable new changes
Many people lost their jobs last year due to pandemic shutdowns. Generally, unemployment compensation is included in gross income for federal tax purposes. But thanks to the American Rescue Plan Act (ARPA), enacted on March 11, 2021, up to $10,200 of unemployment compensation can be excluded from federal gross income on 2020 federal returns for taxpayers with an adjusted gross income (AGI) under $150,000. In the case of a joint return, the first $10,200 per spouse isn’t included in gross income, meaning if both spouses lost their jobs and collected unemployment last year, they’re eligible for up to a $20,400 exclusion. Contact us if you have questions about your situation.
Know the ins and outs of “reasonable compensation” for a corporate business owner
Corporate business owners know that it’s generally better to take money out of a C corporation as compensation rather than as dividends. That’s because a corporation can deduct the salaries and bonuses that it pays, but not dividends. Thus, if funds are paid as dividends, they’re taxed twice, once to the corporation and once to the recipient. Money paid out as compensation is only taxed once to the employee receiving it. But there are limits to how much money you can take out this way. Compensation can be deducted only to the extent that it’s reasonable. Unreasonable portions aren’t deductible and may be deemed dividends. Need help determining a reasonable salary? Contact us.
Changes to premium tax credit could increase penalty risk for some businesses
The American Rescue Plan Act made several significant enhancements to the premium tax credit (PTC). The PTC is a refundable credit that helps individuals and families pay for insurance obtained from a Health Insurance Marketplace (commonly known as an “Exchange”). The expanded PTC will help eligible individuals and families obtain health care coverage. However, because applicable large employers (ALEs) could face shared-responsibility penalties if full-time employees receive PTCs, expanded eligibility could increase penalty exposure for ALEs that don’t offer affordable, minimum-value coverage to full-time employees. Contact us for help determining whether your business is at risk.
You must be logged in to post a comment.