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When you retire, your income will most probably be lower than when you were working, and while your expenses will be lower in some areas — no more commuting — they'll be higher in others — more prescriptions and doctors' visits.
Let's say you decide to onboard a freelancer, also known as an independent contractor. What should your next tax- and finance-related moves be? Let's find out!
Have you found yourself becoming more and more fascinated by all this talk of AI these days? Does the opportunity to drive more strategic growth and gain a competitive edge excite you?
If you make any mistakes on your tax return, you can end up owing even more money. This means you might miss out on the full refund you claimed.
Many employees dash off emails with little attention paid to them. As a manager, you can help focus and train your team on some techniques for effective messaging.
When the IRS looks at your tax forms, the tax agency uses a computer to compare what has been reported to it with what you have reported in terms of income. This is often carried out via 1099 forms — namely the 1099-MISC — which lists nonemployee compensation.
Home renovations and improvements can be costly, running tens of thousands of dollars. Fortunately, you can borrow against your home’s equity to finance the cost of these projects. And you have two main options when deciding how to best do this, both involving home equity.
In legal terms, probate is the general administration of your estate — with or without a will. Your will should contain the name of your executor. If it doesn’t, then an administrator will need to carry out the probate process instead. This might result in your assets being used to pay the liabilities for your estate before anything remaining can be distributed to your and distribute your assets to beneficiaries.
If you get pleasure from rewarding your team's performance with bonuses, you are not alone. But it's important to consider how those bonuses are given, along with the tax implications for both you and the employee.
When you take out a mortgage loan, you’ll have to pay closing costs, the fees that your lender and other third-party companies charge for originating your home loan. These fees can run thousands of dollars, and you’ll typically have the option to pay them upfront as a single payment or roll them into your total mortgage amount and pay them back with your regular payments. Which choice is best? As usual, it depends on your financial situation.
If you own property and assets or have loved ones who depend on you to provide income or care, you should have an estate plan. However, some people hesitate to create one, fearing that taxes will eat up the lion's share of their estate. But even though estate taxes are real and rates are high, topping out at 40%, only people with estates worth many millions of dollars are affected by federal estate taxes. The few estates that pay estate tax generally pay less than one-sixth the value of their estate in tax. Further, only the wealthiest 0.2% of Americans owe any estate tax because of the high exemption amount — $13.61 million per person.
Your business has employees' and may have customers' personal information (names, Social Security numbers, credit card information) stored both physically and electronically. You use this data to meet payroll, fill orders and perform necessary business functions.
Employee classifications are based on job duties and responsibilities. The classifications impact compensation, benefits and work hours; they are also used by employers to maintain compliance with labor laws.
What's involved in financial planning? Your cash flow, savings, debt, investments, insurance and other such elements of your financial life. Financial planning also impacts estate planning. It's an ongoing process.
There’s something known as the Taxpayer Bill of Rights, and it was put into place by the Internal Revenue Service itself. This list of 10 rights pertains to instances where you file your tax return, pay your tax balances, respond to letters or notices, experience being audited or appeal a decision made by the IRS regarding your tax situation.
The child and dependent care credit is a tax benefit designed to help people who both work a job and pay for the care of either children or dependents, if not both. This tax credit aims to cover a portion of the expenses that working individuals have to cover in order to provide care for their children and dependents. It is a means of returning some of what is spent on care, which has the potential to save someone hundreds or thousands of dollars come tax season.
It is difficult — but not impossible — to find funding for a business in volatile economic times: Some investors are always looking for new opportunities. These investors might find a business attractive if it is in a sector that is robust or poised for growth. Investors also consider attractive a solid business plan with achievable goals, a talented leadership team and solid financials. Careful planning and preparation may connect investors to your company.
Have you been thinking about establishing an S corporation? Maybe you have the opportunity to become a shareholder of a corporation of this type. Here's what you should know about S corporations and how they work before getting involved in one:
What is an S corporation? An S corporation essentially passes its income, losses, deductions and credits to its shareholders for the sake of federal tax purposes. From there, shareholders of S corporations report this information as part of their personal tax returns. The shareholders are assessed by the IRS at their individual income tax rates, which makes it possible for S corporations to avoid facing double taxation on corporate income come tax season. How are shareholders taxed? People within an S corporation who are responsible for performing a service for said S corporation will be paid a wage as an employee, even though these people are also considered shareholders. Also known as corporate officers, those who perform more than minor services to an S corporation and receive — or are entitled to receive — compensation will have to pay federal employment taxes. This is true even in instances when shareholders take distributions, accept dividends or receive other forms of compensation. What happens if shareholders do not report wages from an S corporation? Distributions from an S corporation evade the 15% or higher employment tax bracket. This puts small-business owners in a position where they could potentially experience considerable savings. Now, if shareholders fail to declare wages obtained through an S corporation, the IRS will become interested in whether those payments were genuinely paid in exchange for services rendered. The IRS might impose higher taxes if it finds instances of low salaries coupled with high distributions to be suspicious. What are the key provisions of an S corporation? It's important to note that shareholders are not personally responsible for any liabilities or debts associated with the business endeavors of an S corporation. As a result, creditors are not entitled to make any claims on the personal assets of shareholders when settling debt belonging to the S corporation. To qualify as an S corporation, the business is required to be registered as a domestic corporation. S corporations are allowed to consider individuals, trusts and estates as shareholders, but corporations, partnerships and individuals who aren't U.S. residents are not permitted to hold shareholder status. The total number of shareholders for an S corporation cannot exceed 100. Furthermore, each S corporation is eligible for one class of outstanding stock, and the S corporation must be eligible. In other words, there are certain sales corporations, financial institutions and insurance companies that cannot be classified as an S corporation. What documents are involved when opening an S corporation? To officially become an S corporation, you'll need to fill out and then submit Form 2553, Election by a Small Business Corporation. This document must be signed by all shareholders of your S corporation. You'll also need to file Form 1120-S, U.S. Income Tax Return for an S Corporation. All the profits, losses and deductions for each shareholder will be documented via Form 1065, U.S. Return of Partnership Income, which is known as Schedule K-1. Last but not least, S corporation shareholders can expect to file Form 1040, U.S. Individual Income Tax Return, as well as Form 1040 (Schedule E), Supplemental Income and Loss. Are there important advantages of having an S corporation? There are undeniable benefits of establishing an S corporation, hence its appeal. For instance, when you adopt the S corporation structure for your business, you'll end up subsequently lowering the amount of self-employment tax relevant to your company. Additionally, S corporations are viewed as highly credible in the eyes of vendors, partners and customers. Should you be concerned about the disadvantages of having an S corporation? There are possible disadvantages you should be aware of when looking at forming an S corporation. For starters, there are many protocols that you must follow when establishing this type of corporation. As an example, directors and shareholders have to attend scheduled meetings that must last for a certain number of minutes. There also are formalized bylaws that S corporations are required to uphold, not to mention the maintenance of proper records and various corporation-specific recordkeeping requirements. What happens if you want to transfer ownership of your S corporation? On the bright side, it is rather easy to transfer interest within an S corporation, especially compared to the same task with other types of business entities. You can structure the sale in one of two ways: You can set up an outright sale, where the buyer will make the purchase and ownership is transferred immediately; and alternatively, you can opt for a gradual sale, where the purchase takes place over time. Either way, the transfer of ownership regarding the S corporation needs to be facilitated via an official written sales agreement in order to formalize the process. Before establishing your business as an S corporation, keep in mind that your company will likely require paying more attention to the accounting and bookkeeping side of things than ever before. It's best to onboard the help of qualified accountants who can assist you. Don't be afraid to contact professionals who can provide you with banking and legal advice when it comes to business loans, taxation laws and other related issues. Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much! There are two kinds of 529 plans: prepaid tuition plans and savings plans. Prepaid tuition plans (available in only nine states) allow you to pay current tuition rates for future attendance at designated colleges and universities; they are a way to lock in a lower cost for college attendance. The savings plans allow you to save for education on a tax-deferred basis; additionally, withdrawals from the plan are tax free when they are used for qualifying education expenses.
With the rise of the gig economy, a lot of people have opted to turn their hobbies into profitable ventures. In turn, the lines are blurring between hobbies and small businesses, provoking many people to wonder what it means for their taxes. So, what is the difference?
Form I-9 asks your employees to present documents to attest to their identity and employment authorization. It's your job to make sure the documents seem genuine and relate to the employee.
You may have many questions about working after retirement. Can you still contribute to retirement accounts? How does working affect your required minimum distributions?
Accredited investors have special status allowing them to make investments in unregulated securities — an early-stage business or certain commercial real estate opportunities, for instance. A popular example of an accredited investor is a so-called angel investor, one who funds a promising startup. A later stage private company or even a smaller public company seeking liquidity might also seek accredited investors, though they do not usually choose to do so.
Once you reach a certain age, you must take an annual required minimum distribution, which is a payout from your traditional IRA, 401(k) or other retirement account. The required amount is calculated based on your age and the account balance.
When starting a family, you might be interested to know that you're now eligible to claim new credits and deductions, which ultimately lessens the total value of your tax liability.
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