The Tax Cuts and Jobs Act is the biggest federal tax law change in over 30 years. Below are some significant changes affecting corporations. Note: Except where noted, the changes are effective for tax years 2018–2025. Corporation Tax Rates Changes have been made to the corporation tax rates, which under prior law contained several graduated tax brackets. For tax years beginning after 2017: • All taxable income of a C corporation is taxed at a flat tax rate of 21%. • There is no longer a separate … [Read more...] about Tax Cuts and Jobs Act Corporations
Real Estate Professionals
Tax Benefits A taxpayer who spends significant time in activities related to real estate may qualify as a “real estate professional,” which can provide tax benefits. Passive Loss Limits A passive activity is generally defined as a business activity without a minimum amount of “material participation” by the taxpayer. A taxpayer is not allowed to deduct losses from passive activities in excess of income from passive activities. Any unused losses from passive activities must be carried forward … [Read more...] about Real Estate Professionals
Newlyweds Tax Tips
Tips for Newlyweds Updating your status from single to married may bring about some unanticipated changes, including changes relating to your taxes. While wedding planners don’t typically use an IRS checklist, here are a few things to keep in mind when filing your first tax return as a married couple. As with any tax issue, contact your tax professional to help you navigate your own unique situation. Notify the Social Security Administration (SSA) If one of you has taken on a new name, … [Read more...] about Newlyweds Tax Tips
Employee or Independent Contractor
Employee or Independent Contractor? In order for a business owner to know how to treat payments made to workers for services, he or she must first know the business relationship that exists between the business and the person performing the services. A worker’s status determines what taxes are paid and who is responsible for reporting and paying those taxes. A worker performing services for a business is generally an employee or an independent contractor. If a worker is classified … [Read more...] about Employee or Independent Contractor
Inventory/ Cost of Goods Sold
Inventory An inventory is necessary to reflect gross profit when the production, purchase, or sale of merchandise is an income-producing factor. However, if an inventory is necessary to account for your income, you generally must use and accrual method of accounting for sales and purchases, unless you are a small business taxpayer. Small business taxpayer. You are a small business taxpayer if you have average annual gross receipts of $25 million or less for the prior three tax years and are … [Read more...] about Inventory/ Cost of Goods Sold
Fringe Benefits
Tax Treatment of Fringe Benefits The term “fringe benefit” refers to any benefit provided to an employee that is in addition to money. All benefits provided to an employee are taxable unless the law specifically excludes or defers tax on the benefit. Thus, a fringe benefit can either be taxable, tax-deferred, or excluded from taxation. The personal use of an employer-provided vehicle is an example of a taxable fringe benefit. An employer contribution to a qualified retirement plan on behalf … [Read more...] about Fringe Benefits
Corporation Meeting Requirements
Corporation Meeting Requirements State corporation law and the corporation’s own bylaws set the rules by which a corporation holds valid meetings, takes valid corporate actions, and keeps corporate minutes. An organization’s legal standing as a corporation is risked if a corporation fails to hold corporate meetings documented by the corporation’s minutes. Piercing the Corporate Veil Corporations are often formed for purposes of protecting shareholders from liability. If formalities are not … [Read more...] about Corporation Meeting Requirements
S Corporations
What You Need to Know About S Corporations S corporations are corporations that elect to pass income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains … [Read more...] about S Corporations
Partnerships
What You Need to Know About Partnerships A partnership is the relationship existing between two or more persons who join together to carry on a trade or business. Each person contributes money, property, labor, or skill and expects to share in the profits and losses of the business. A partnership must file an annual information return to report the income, deductions, gains, or losses from its operations, but it does not pay income tax. Instead, it passes through any profits or losses to its … [Read more...] about Partnerships
Limited Liability Companies (LLCs)
Limited Liability Companies (LLCs) What is a Limited Liability Company? A limited liability company (LLC) is a business entity organized in the United States under state law. Unlike a partnership, all of the members of an LLC have limited personal liability for its debts. Depending on elections made and the number of owners, an LLC may be classified for federal income tax purposes as a partnership, corporation, or an entity disregarded as separate from its owner. This information applies to … [Read more...] about Limited Liability Companies (LLCs)