Ag FinTax

 If you own your business and have at least one employee, a great way to obtain the maximum tax deductions possible for health care insurance and other medical expenses is to establish a health reimbursement arrangement for your employees, which can include you and/or your spouse. There are three types: 105-HRAs, which are available where your spouse is your only employee;  Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs);  Individual Coverage Health Reimbursement Accounts (ICHRAs);  All three types of HRAs come with a pesky annual filing requirement: each year, the plan sponsor must file IRS Form 720 and pay a Patient-Centered Outcomes Research Institute (PCORI) fee. But there is an exception: you need not pay the PCORI fee if your HRA is an “excepted benefit.” This is the case if the HRA reimburses employees for only limited-scope dental and vision expenses or long-term care coverage and is not integrated with a group health plan. The PCORI fee ...

All small-business owners with one to 49 employees should have a medical plan in their business. Sure, the tax law does not require you to have a plan, but you should. Most of the tax rules that apply to medical plans are straightforward when you have fewer than 50 employees. And then there’s a great rule if you have your spouse as your only employee in a proprietorship. Take a few minutes to review the six medical plan strategies in this article. You could find some big money sitting on the table waiting for you. Big Picture Here are the six opportunities we will explain in this article: Claim the federal tax credit equal to 100 percent of required emergency sick leave and emergency family leave payments made pursuant to the Families First Coronavirus Response Act (FFCRA). Reimburse your 2020 Section 105 or other health reimbursement account (HRA) medical expenses now. Reimburse your Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). Reimburse your Indiv...

The clock continues to tick. Your retirement is one year closer. You have time before December 31 to take steps that will help you fund the retirement you desire. Take a few minutes to review the four retirement plan tax-reduction strategies in this article. You might find several thousand dollars (and maybe much more) in your pocket by taking the actions in this article. But you’ll need to act now to get the cash. Big Picture Here are the four opportunities we explain in this article: 1.Establish your 2020 retirement plan before December 31 so you can make both an employee and an employer contribution. Yes, you can do this even if you are the sole owner/worker in a proprietorship or a corporation. 2.Claim up to $15,000 in tax credits by having your business create a retirement plan that covers you and your employees. 3.Claim up to $1,500 in tax credits by enabling the automatic contribution. 4.Convert to a Roth IRA. 1. Establish Your 2020 Retirement Plan First, a...

Here’s the basic strategy: Avoid the high taxes (up to 40.8 percent) on short-term capital gains and ordinary income. Lower the taxes to zero—or if you can’t do that, then lower them to 23.8 percent or less by making the profits subject to long-term capital gains. Think of this: you are paying taxes at a 71.4 percent higher rate when you pay at 40.8 percent rather than the tax-favored 23.8 percent. And if you can avoid that higher rate with some easy adjustments in your stock portfolio, doesn’t it make sense todo that now? Big Picture Here are the five basic tax rules you need to know to find the tax savings you desire in your stock portfolio: On your short-term capital gains and ordinary income, you pay federal taxes at rates of up to 40.8percent. The 40.8 percent comes from the top income tax rate of 37 percent plus the 3.8 percent Affordable Care Act tax on net investment income. You pay taxes on your long-term capital gains at rates from zero up to 23.8 percent (20 percent for capi...

With all that’s happened in 2020, it’s easy to forget about your Section 199A deduction. You may remember that the Tax Cuts and Jobs Act (TCJA) gave many pass-through businesses the Section 199Adeduction as a no-effort, do-nothing 20 percent tax deduction based on defined business income. For example, with defined qualified business income of $100,000 and defined taxable income of $100,000, you qualify for a $20,000 Section 199A deduction that you claim on your Form 1040. One thing to be aware of is that tax planning that reduces your business income can also reduce your Section199A deduction. For example, you buy $40,000 of equipment and expense it. Now, your qualified business income is $60,000 ($100,000 - $40,000) and your 199A deduction is $12,000 ($60,000 x 20 percent). Your planning for the Section 199A deduction requires more attention if your qualified business income is more than $163,300 (or $326,600 on a joint return). In this article, we bring you three Section 199A strateg...

  Do you need a replacement business car, SUV, van, or pickup truck? Do you need tax deductions this year? If you answered yes to both questions, you need to examine this article and get ready to smile. Thanks to the Tax Cuts and Jobs Act (TCJA) tax reform, you can write off the cost of a vehicle purchase faster than ever before — including, in many cases, up to 100 percent of the cost in 2020. Get the Timing Right Don’t procrastinate. If you want the vehicle deduction, you need to own the vehicle, and place it in business service on or before December 31, 2020.   To ensure compliance with the “placed in service” rule, drive the vehicle at least one business mile on or before December 31, 2020. In other words, you want to both own and drive the vehicle to ensure that it qualifies for the big deductions. Now that you have the basics, let’s get to the tax deductions. 1.    Buy a New or Used SUV, Crossover Vehicle, or Van Let’s say that on or befor...

  Last December, the imaginatively named Setting Every Community Up for Retirement Enhancement Act (SECURE Act) became law. The SECURE Act was intended mainly to expand opportunities for individuals to increase their retirement savings and to simplify the administration of retirement plans. Fine. Good. But the act also included a big unfavorable change that kneecapped the so-called stretch IRA estate planning strategy that was employed by well-off IRA owners. Before covering this unfavorable development and what you can do in response, let’s first review some background information and how the stretch IRA strategy worked before the damage done by the SECURE Act. Here goes. Effective date.  The SECURE Act’s anti–stretch IRA change is generally effective for IRAs inherited by non-spousal beneficiaries from account owners who die after 2019. An IRA that was inherited from an original account owner(the person for whom the account was first established) who died in 2019 or earlier ...