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The IRS has issued guidance providing relief from failure to make employment tax deposits for employers that are entitled to the refundable tax credits provided under two laws passed in response to the coronavirus (COVID-19) pandemic. The two laws are the Families First Coronavirus Response Act, which was signed on March 18, 2020, and the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act, which was signed on March 27,...

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April 17, 2020

Businesses across the country are being affected by the coronavirus (COVID-19). Fortunately, Congress recently passed a law that provides at least some relief. In a separate development, the IRS has issued guidance allowing taxpayers to defer any amount of federal income tax payments due on April 15, 2020, until July 15, 2020, without penalties or interest.  New law On March 18, the Senate passed the House’s coronavirus bill, the Families...

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March 23, 2020

If you’re the owner of an incorporated business, you probably know that there’s a tax advantage to taking money out of a C corporation as compensation rather than as dividends. The reason is simple. A corporation can deduct the salaries and bonuses that it pays executives, but not its dividend payments. Therefore, if funds are withdrawn as dividends, they’re taxed twice, once to the corporation and once to the recipient....

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March 20, 2020

If you’re a business owner, be aware that a recent tax law extended a credit for hiring individuals from one or more targeted groups. Employers can qualify for a valuable tax credit known as the Work Opportunity Tax Credit (WOTC). The WOTC was set to expire on December 31, 2019. But a new law passed late last year extends it through December 31, 2020. Generally, an employer is eligible for...

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March 16, 2020

The IRS has released proposed regulations addressing the deductibility of meal and entertainment expenses in tax years beginning after December 31, 2017. Among other things, the proposed regs clear up lingering confusion regarding whether meals are considered entertainment and, therefore, generally nondeductible. TCJA rule changes Prior to the Tax Cuts and Jobs Act (TCJA), Section 274 of the Internal Revenue Code generally prohibited deductions for expenses related to entertainment, amusement...

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March 13, 2020

If you’re a business owner, be aware that a recent tax law extended a credit for hiring individuals from one or more targeted groups. Employers can qualify for a valuable tax credit known as the Work Opportunity Tax Credit (WOTC). The WOTC was set to expire on December 31, 2019. But a new law passed late last year extends it through December 31, 2020. Generally, an employer is eligible for...

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March 09, 2020

If you’re self-employed and work out of an office in your home, you may be entitled to home office deductions. However, you must satisfy strict rules. If you qualify, you can deduct the “direct expenses” of the home office. This includes the costs of painting or repairing the home office and depreciation deductions for furniture and fixtures used there. You can also deduct the “indirect” expenses of maintaining the office....

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March 06, 2020

Do you conduct your business as a sole proprietorship or as a wholly owned limited liability company (LLC)? If so, you’re subject to both income tax and self-employment tax. There may be a way to cut your tax bill by using an S corporation. Self-employment tax basics The self-employment tax is imposed on 92.35% of self-employment income at a 12.4% rate for Social Security up to a certain maximum ($137,700...

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February 28, 2020

Many people who launch small businesses start out as sole proprietors. Here are nine tax rules and considerations involved in operating as that entity. 1. You may qualify for the pass-through deduction. To the extent your business generates qualified business income, you are eligible to claim the 20% pass-through deduction, subject to limitations. The deduction is taken “below the line,” meaning it reduces taxable income, rather than being taken “above...

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February 21, 2020

Are you an employer who owns a business where tipping is customary for providing food and beverages? You may qualify for a tax credit involving the Social Security and Medicare (FICA) taxes that you pay on your employees’ tip income. How the credit works The FICA credit applies with respect to tips that your employees receive from customers in connection with the provision of food or beverages, regardless of whether...

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February 14, 2020