Ag FinTax

If you have employees, you must withhold their 6.2 percent share of the Social Security (OASDI) tax from their wages up to an annual wage ceiling ($137,700 for 2020). You pay the money to the IRS along with your matching 6.2 percent employer share of the tax. The combined 12.4percent Social Security tax is one of the biggest tax burdens faced by businesses and their employees. Relief for Employer Portion The Coronavirus Aid, Relief, and Economic Security (CARES) Act, a COVID-19 relief measure passed by Congress, allows employers to defer paying the employer 6.2 percent share of the Social Security tax from March27, 2020, through December 31, 2020. Fifty percent of the deferred tax must then be paid by December 31, 2021, and the remaining 50 percent by December 31, 2022. This deferral is also available to self-employed taxpayers. Employee Portion The CARES Act did not defer the employee portion of the Social Security tax. Thus, employers had to continue to withhold this 6.2 percent tax ...

It’s time to examine your existing business and personal (yes, personal) cars, SUVs, trucks, and vans for some profitable year-end business tax deductions. In this article, we will first look at your prior and existing business vehicles that you or your pass-through business owns. Then, we will take a look at your personal vehicles as a possible source for a last-minute tax-saving deduction. Let’s start with prior and existing business vehicles. Your first step is to identify your gain or loss on sale. Once you have the gain or loss, know these basic rules: Gains attributable to depreciation produce ordinary income. Gains in excess of original basis produce capital gains. (This is unlikely to happen on most business vehicles, but it can happen with classic and antique business vehicles because they can go up in value.) Losses on business vehicles produce ordinary deductions. You report gains and losses on IRS Form 4797, which means those gains and losses travel outside of...

1. Do you need a replacement business car, SUV, van, or pickup truck? 2. 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 before December 31, 2020, ...

If you have children under the age of 18 and you file your business tax return as a proprietorship or partnership, you can find big savings in the work your children do for your business. And if you operate as a corporation, don’t neglect to hire your children; there are good savings for you there, too. In this article, you will find five year-end tax-deduction strategies that apply if you are getting married or divorced, have children who did or could work in your business, and/or have situations where you give money to relatives and friends. 1. Put Your Children on Your Payroll Did your children under age 18 help you in your business this year? Did you pay them for their work? You should pay them for the work—and pay them on a W-2. Why? First, W-2 wages paid by the parent to the parent’s under-age-18 child for work done on the parent’s Form 1040 Schedule C business are both ·deductible by the employer-parent, and ·exempt from federal payroll taxes for both the parent ...

  The purpose of this article is to get the IRS to owe you money.   Of course, the IRS is not likely to cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you pay less in taxes.   This article gives you seven powerful business tax deduction strategies that you can easily understand and implement before the end of 2020.   1. Prepay Expenses Using the IRS Safe Harbor You just have to thank the IRS for its tax-deduction safe harbors.   IRS regulations contain a safe-harbor rule that allows cash-basis taxpayers to prepay and deduct qualifying expenses up to 12 months in advance without challenge, adjustment, or change by the IRS.   Under this safe harbor, your 2020 prepayments cannot go into 2022. This makes sense, because you can prepay only 12 months of qualifying expenses under the safe-harbor rule. For a cash-basis taxpayer, qualifying expenses include, among others, lease p...

 How do you avoid losing money by making the wrong choice? Here’s one way to see the issue: Say you have seven employees who now work at least two days a week from home because of COVID-19. To facilitate this working at both the office and the home, you purchased seven laptop computers at a cost of $2,179 each. You have five choices for deducting the computers: De minimis expensing Bonus depreciation Section 179 expensing Modified accelerated cost recovery system (MACRS) depreciation Straight-line depreciation You have four things to consider: What is the maximum you can deduct this year, and what if you want to deduct less? How does this affect your Section 199A deduction if you operate as a proprietorship, a partnership, or an S corporation? (C corporations don’t qualify for the Section 199A deduction. If you operate as an LLC, you are one of the four taxable entities just mentioned.) If you file as a proprietorship on Schedule C of your Form 1040, is there a self-employment tax ...