Category: Tax Planning

Tax-Saving Tips

New IRS 199A Regulations Benefit Out-of-Favor Service Businesses

If you operate an out-of-favor business (known in the law as a “specified service trade or business”) and your taxable income is more than $207,500 (single) or $415,000 (married, filing jointly), your Section 199A deduction is easy to compute. It’s zero.

This out-of-favor specified service trade or business group includes any trade or business

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Top 10 Year End Tax Planning Mistakes

#10 – Failure to rebalance your stock portfolio’s asset allocation and harvest capital losses to minimize 2017 recognized capital gains. Beginning in 2018, under the new tax law proposals, taxpayers will no longer be able to choose stocks with a higher tax basis to sell.

Taxpayers will be required to use the FIFO method, first-in first-out method for identifying the cost basis for stocks being sold. This method usually results in lower cost basis for stock being sold and thus higher taxes! December, 2017 is the last month in which taxpayers have a choice in determining which stocks to sell at a higher tax basis.

#9 – Failure to purchase furniture, equipment, tools, computers and other fixed assets by December 31, 2017. If business owners plan to purchase those assets during the first six months of 2018, they should consider purchasing those assets in December, 2017. In doing so, business owners may save more taxes on those purchases because tax rates for business owners are expected to be lower in 2018.

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Inherited IRA Options for the Non-Spouse Beneficiary

Did you know that when you inherit an IRA you can limit your income tax liability by deciding how distributions are made to you?  Unfortunately, many IRA beneficiaries don’t know they have options and so they cash in their inherited IRA and expose themselves to significant income tax liabilities.  The options available to IRA beneficiaries vary depending on if the beneficiary is a spouse or non-spouse, so this article will focus on the three distribution options non-spouse IRA beneficiaries typically have to limit their tax liabilities. Not all distribution options work best for every situation, so IRA beneficiaries are encouraged to consult with their CPA and attorney to find out which option works best for them.

Option 1: Rollover IRA with Five Year Distribution

If an IRA owner dies and designates a non-spouse beneficiary, such as a child, parent, sibling, or friend, the beneficiary can choose to rollover the IRA into their name, but the entire IRA must be distributed to the beneficiary within five years of December 31 of the year following the IRA owner’s date of death.  This option gives the non-spouse beneficiary access to money relatively soon and spreads out the tax liability over a five year period, rather than in one year if a lump sum distribution is taken.

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The Top 3 New Year’s Resolutions for the Long-Term Success of your Small Business

As a small business owner, how many times have you set lofty New Year’s resolutions for your business that never amounted to anything? This year, you can set three achievable resolutions that are simple to accomplish yet stay focused on the long-term success of your business. These resolutions will finally address those lingering tax savings, succession planning, and estate planning issues that you have put off for too long.  Accomplishing these resolutions will affect your bottom line and give you peace of mind for years to come.

Resolution #1: Implement Simple Choice of Entity Strategies for Tax Savings in 2017

Do you know if your business is taxed as a sole proprietorship, partnership, C-Corp, or S-Corp?  Do you know what tax bracket you are in? Did you know that if you are single, your business is a sole proprietorship, and you make between $37,650-$91,150, or if married, and you make between $75,300-$151,900, that your taxable rate on your business profits is 46%?  A business’ choice of tax entity can have major tax implications, but many small business owners are unaware that such issues exist. As a result, many small businesses are often taxed as the wrong type of entity and they end up paying too much in taxes.  This year, meet with your attorney and CPA to review your choice of entity options and see if you can save taxes by being an S-Corp.

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Releasing Tax Liens on Business Assets-Case Study

If your business has IRS and/or Ohio state tax liens, your tax problems will not just go away on their own.  The IRS and state of Ohio will eventually seize your assets or force you to declare bankruptcy – causing mayhem for you, your business, and your family.  However, if you find yourself deep in a hole with tax liens, there are different settlement strategies you might be able to implement to release these liens without completely paying them off.  These strategies may require you to sell most or all of your business assets, but you’ll ultimately save the time, money, hassle, and embarrassment of going through bankruptcy proceedings or having your assets seized.

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Amended Substitute House Bill 5 (HB 5)

Dear Client and Friends:

This year Municipal tax reform will take effect under the Amended Substitute House Bill 5. The Amended Substitute House Bill 5(HB 5) was signed into law on December 19, 2015. The new provisions take effect beginning on or after January 1, 2016. HB 5 provides some relief to the overly burdensome process for businesses in determining what local tax to pay and withhold from their employees when they do business in multiple municipalities.

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Affordable Care Act Changes

Under the Affordable Care Act, there are new reporting requirements for the employer to report the cost of coverage under an employer-sponsored group health plan. For years after 2011, employers generally are required to report the cost of health benefits provided on the Form W-2. All employers that provide “applicable employer-sponsored coverage” under a group health plan are subject to the reporting requirement.
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2015 Federal Gift & Estate Tax Rates | Estate Planning

Each year, the IRS adjusts the limits for the amount of tax-free annual and lifetime gifts an individual can make. The Federal estate tax lifetime exemption is the amount an individual can leave to his or her heirs without having to pay Federal estate tax. The annual gift tax exclusion is the amount an individual can gift each year to another individual without using up their lifetime exemption. Beginning January 2015, the IRS has adjusted for inflation the federal estate tax lifetime exemption amount. The exemption amount has increased from $5.34 million to $5.43 million. The combined lifetime exemption amount has also increased for married couples, rising from $10.68 million to $10.86 million. With the Federal estate tax rate at 40%, it becomes critical to plan to avoid estate taxes if you are an individual with higher wealth exceeding the lifetime exemption.

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