Posts by Janet Kim

The President’s recently released tax reform plan as detailed below is similar to the proposals made on the campaign trail. For business taxpayers: The top tax rate for all businesses including Partnerships and S Corporations (pass-through businesses) would be slashed to 15%. The current top tax rate is 35% for corporations and 39.6% for pass-through businesses. Upon cash distributions from pass-through entities, a second layer of tax might be imposed similar to dividends now taxed to C corporation shareholders. For Individual taxpayers: The current seven individual income tax rates of 10%, 15%, 25%, 28%, 33%, 35% and 39.6% would be
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The holidays can be a joyous — but hectic — time of year. While you’re juggling shopping for gifts, decorating your home and planning get-togethers with friends and family, it’s easy to forget to spend any remaining funds in your Flexible Spending Accounts (FSAs) before New Year’s Day. However, if you fail to observe the “use-it-or-lose-it rule,” you could forfeit any money left over in your accounts, unless a special provision applies. In addition to spending what’s left of last year’s FSA balance, November is the time of year when you need to decide on the types of spending/savings accounts
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The IRS announced that it is extending one of the deadlines for providing 2016 Affordable Care Act (ACA) information statements to recipients. Specifically, the due date for furnishing to individuals the 2016 Form 1095-B (Health Coverage) and the 2016 Form 1095-C, (Employer-Provided Health Insurance Offer and Coverage) is extended from January 31, 2017, to March 2, 2017. Q&As about the Process and Extended Due Date What about filing these statements with the IRS? Is there an extension? No. The deadline for filing the forms with the IRS is not being extended. The IRS has determined that there’s no similar need
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The Joint Committee on Taxation (JCT) is a nonpartisan Congressional committee that, among other things, assists in the analysis and drafting of proposed federal tax legislation and prepares reports that interpret newly enacted federal tax legislation. The JCT recently issued the Overview of the Federal Tax System as in Effect for 2016. Here are the details of that report, including some interesting trends about business taxes. Background on Business Taxes The federal income tax treatment of a domestic business operation — one that’s domiciled in the United States — depends on how it’s set up. A business’s “choice of entity”
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Do you want to be extra-generous to employees who are doing a good job? Bonuses and gifts can be an effective motivational tool, but be aware of all the tax consequences. Usually, employees will face a tax bill for your generosity. Background: Unlike gifts made on a personal level, gifts from an employer to employee (outside the context of employment) are generally taxable to the recipient as supplemental wages. In other words, the gifts are subject to both income tax and employment taxes. The value of the gifts must be reported on the employee’s Form W-2 for that year. In
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Corporations can generally deduct interest on debts for federal tax purposes. A valid obligation exists if the parties intended to create a debt, and the debt is enforceable and unconditional. In contrast, a capital contribution is a direct or indirect contribution of cash or other property to the capital of a business entity. Generally, a contribution to the capital of a corporation isn’t treated as taxable income to the corporation, and the contributor can’t deduct the payment for tax purposes. The issue of whether certain corporate instruments should be classified as debt owed by the corporation or as an equity
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In California, if you, as a taxpayer, are the 100% shareholder and also an officer of a corporation, you can save up to $998 in 2017 by electing to exclude your wages from the corporation from SDI withholding. The SDI withholding rate for 2017 is 0.9%. The taxable wage limit is $110,902 for each employee per calendar year. Therefore, the maximum withholding for each employee is $998. The taxpayer can claim the exclusion by filing a simple one page statement with the California Employment Development Department (EDD). The exclusion will be effective in the calendar quarter filed. (see www.edd.ca.gov/pdf_pub_ctr/de459.pdf). However,
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There’s no doubt about it: Business has gone international. New electronic and logistical technologies have narrowed distance and time, and trade agreements have opened markets. And manufacturers are in a good position to venture into the business of exporting. Fluctuating currency-exchange rates and other challenges can make going global a challenge, but there are many benefits to consider, including: Boosting revenue. A larger market base and new demand from various niches can not only increase your sales, it can offer economies of scale, letting you get more from your resources. Expanding profits. Earnings can rise quickly if you are able
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Whether you’re thinking about starting your own business or investing in a start-up, there’s an exciting tax break that could sweeten the deal: Gains from selling qualified small business stock (QSBS) that you acquire on or after September 28, 2010, are potentially eligible for a 0% federal income tax rate. Thanks to the Protecting Americans from Tax Hikes (PATH) Act of 2015, the 0% rate on QSBS gains is now permanent. But you must own the QSBS for over five years and not all shares will qualify for the 0% rate. Here are some key points to help determine whether
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Today’s low-interest-rate environment makes it easy to loan money to family members on favorable terms with full IRS approval. Here’s a rundown of what the law covers and why now might be a good time to set up loans. Nothing in the tax law prevents you from making loans to family members (or unrelated people for that matter). However, unless you charge what the IRS considers an “adequate” interest rate, the so-called below-market loan rules come into play. For instance, let’s say you loan $50,000 interest-free to your daughter so she can buy her first home. Under the below-market loan
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