Tax-favored Qualified Small Business Corporation status could help you thrive
Operating your small business as a Qualified Small Business Corporation (QSBC) could be a tax-wise idea. QSBCs are the same as garden-variety C corporations for tax and legal purposes, except QSBC shareholders are potentially eligible to exclude from federal income tax 100% of their stock sale gains. That translates into a 0% federal income tax rate on QSBC stock sale profits! However, you must meet several requirements set forth in the Internal Revenue Code, and not all shares meet the tax-law description of QSBC stock. Consult with the CPA's and business tax advisors at SEK if you’re interested in operating your business as a QSBC or for more tax questions and tax tips.
Comparing inter vivos and testamentary trusts
Trusts are used to accommodate asset transfers beyond dispositions in a will. There are two main types: the inter vivos trust and the testamentary trust. An inter vivos trust, sometimes called a “living trust,” is created during your lifetime. A testamentary trust, on the other hand, is created when the grantor passes away. It doesn’t officially become effective until the grantor’s death, and at that time it becomes irrevocable. The choice between an inter vivos or testamentary trust often depends on your estate planning objectives, including tax implications and whether you want to avoid probate or maintain control over assets. Contact the CPA's and business advisors at SEK to answer your tax questions and for more tax tips.
The kiddie tax could affect your children until they’re young adults
The “kiddie tax” can cause some of a child’s unearned income to be taxed at the parent’s higher marginal federal income tax rates instead of at the usually much lower rates that a child would otherwise pay. For purposes of this federal income tax provision, a “child” can be up to 23 years old. The kiddie tax is only assessed on a child’s or young adult’s unearned income. Earned income from a job or self-employment is never subject to the kiddie tax. Other rules apply. Contact the CPA's and business tax advisors if you want more information or for more tax tips.
Understanding reporting obligations under the Affordable Care Act (ACA)
The Affordable Care Act (ACA), also known as Obamacare, has been a landmark legislation impacting healthcare in the United States. Understanding and fulfilling reporting obligations under the ACA is crucial for employers to avoid penalties and ensure compliance.
Does your business have employees who get tips? You may qualify for a tax credit
If you’re an employer with a business where tipping is routine when providing food and beverages, you may qualify for a federal tax credit involving the Social Security and Medicare (FICA) taxes that you pay on your employees’ tip income. The credit is claimed as part of the general business credit. In other words, no credit is available to the extent the tip income just brings the employee up to $5.15 per hour, calculated monthly. Contact the CPA's and business tax advisors for questions about this potentially valuable tax break, tax news and more tax tips!
Nonprofits: Got independent contractors? Get to know Form W-9
If your not-for-profit is shorthanded, you may decide to engage independent contractors to pick up some of the slack. Just make sure you’re collecting the right information. Organizations need a completed Form W-9 for every nonemployee they pay for services. If a contractor doesn’t provide you with a Tax Identification Number or the number is wrong, the IRS may require you to “backup withhold” a portion of payments. Contact the CPA's and business tax advisors at SEK for your tax questions and more tax tips and tax news.
Timing counts when valuing a business
A business’s value may change significantly over time, so it’s important to choose the valuation date carefully. This date serves as a cutoff for the information that can be used to estimate value. In general, events that happen after the valuation date can’t be considered, unless the information was “reasonably known or knowable” on the valuation date. The CPA's and business advisors at SEK can help you determine what’s appropriate based on relevant laws and case facts. Contact us for more tax news and tax tips!
Going global: How your nonprofit can navigate potential obstacles
Are you planning to make 2024 the year your not-for-profit ventures overseas? If you plan to solicit donations, recruit members, employ staffers or sell products in foreign countries, make sure you’ve analyzed potential tax and legal issues, at home and abroad. A cultural advisory committee that includes expatriates can help you navigate new markets. And we can analyze your financials to help ensure the venture is feasible. Contact the CPA's and business advisors at SEK for tax guidance, tax tips and tax news!
Perform an operational review to see how well your business is running
In M&A, business buyers perform operational due diligence to identify the strengths and weaknesses of a target company’s day-to-day activities. Business owners can perform an operational review to glean the same insights. Business buyers typically evaluate three primary areas: production/operations, selling, general & administrative items, and human resources, to determine the reasonability and sustainability of things such as compensation, benefits and staff relations. Contact the CPA's and business tax advisors at SEK for help performing an operational review and more tax tips.
It’s possible (but not easy) to claim a medical expense tax deduction
Can you deduct your out-of-pocket medical costs on your tax return? It depends. Medical expenses can be deducted only to the extent unreimbursed costs exceed 7.5% of your adjusted gross income. Plus, medical costs are deductible only if you itemize, which means that your itemized deductions must exceed your standard deduction. Eligible costs include: hospital bills, health insurance premiums, eyeglasses, hearing aids, most dental work, prescriptions, smoking-cessation programs and some costs of transportation to get to and from medical appointments. Contact the CPA's and business tax advisors at SEK to asses if you can claim a deduction, for more tax tips or to answer any of your tax questions.