14Dec
2018 Q1 tax calendar: Key deadlines for businesses and other employers
Uncategorized

 

Here are some of the key tax-related deadlines affecting businesses and other employers during the first quarter of 2018. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

January 31

  • File 2017 Forms W-2, “Wage and Tax Statement,” with the Social Security Administration and provide copies to your employees.
  • Provide copies of 2017 Forms 1099-MISC, “Miscellaneous Income,” to recipients of income from your business where required.
  • File 2017 Forms 1099-MISC reporting nonemployee compensation payments in Box 7 with the IRS.
  • File Form 940, “Employer’s Annual Federal Unemployment (FUTA) Tax Return,” for 2017. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it’s more than $500, you must deposit it. However, if you deposited the tax for the year in full and on time, you have until February 12 to file the return.
  • File Form 941, “Employer’s Quarterly Federal Tax Return,” to report Medicare, Social Security and income taxes withheld in the fourth quarter of 2017. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until February 12 to file the return. (Employers that have an estimated annual employment tax liability of $1,000 or less may be eligible to file Form 944,“Employer’s Annual Federal Tax Return.”)
  • File Form 945, “Annual Return of Withheld Federal Income Tax,” for 2017 to report income tax withheld on all nonpayroll items, including backup withholding and withholding on accounts such as pensions, annuities and IRAs. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year in full and on time, you have until February 12 to file the return.

February 28

  • File 2017 Forms 1099-MISC with the IRS if 1) they’re not required to be filed earlier and 2) you’re filing paper copies. (Otherwise, the filing deadline is April 2.)
  • March 15
  • If a calendar-year partnership or S corporation, file or extend your 2017 tax return and pay any tax due. If the return isn’t extended, this is also the last day to make 2017 contributions to pension and profit-sharing plans.

© 2017

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06Dec
Do your financial statements contain hidden messages?
Business Ownership

 

Over time, many business owners develop a sixth sense: They learn how to “read” a financial statement by computing financial ratios and comparing them to the company’s results over time and against those of competitors. Here are some key performance indicators (KPIs) that can help you benchmark your company’s performance in three critical areas.

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04Dec
Why you may want to accelerate your property tax payment into 2017
Taxes

 

Accelerating deductible expenses, such as property tax on your home, into the current year typically is a good idea. Why? It will defer tax, which usually is beneficial. Prepaying property tax may be especially beneficial this year, because proposed tax legislation might reduce or eliminate the benefit of the property tax deduction beginning in 2018.

Proposed changes

The initial version of the House tax bill would cap the property tax deduction for individuals at $10,000. The initial version of the Senate tax bill would eliminate the property tax deduction for individuals altogether.

In addition, tax rates under both bills would go down for many taxpayers, making deductions less valuable. And because the standard deduction would increase significantly under both bills, some taxpayers might no longer benefit from itemizing deductions.

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01Dec
Accrual-basis taxpayers: These year-end tips could save you tax
Business Ownership

 

With the possibility that tax law changes could go into effect next year that would significantly reduce income tax rates for many businesses, 2017 may be an especially good year to accelerate deductible expenses. Why? Deductions save more tax when rates are higher.

Timing income and expenses can be a little more challenging for accrual-basis taxpayers than for cash-basis ones. But being an accrual-basis taxpayer also offers valuable year-end tax planning opportunities when it comes to deductions.

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17Nov
Tax Reform Comparison House and Senate Bills Vs. Current Law
Taxes

 

On Thursday, November 16, the House of Representatives passed their version of the Tax Reform bill.  The Senate Finance Committee also voted to approve their version, which will allow the Senate to consider the bill after Thanksgiving.  While both bills contain many similar proposals, there are some major differences.  At Hancock & Dana, we have been closely following the proposed changes and how they may affect our clients and we will continue to do so.

The chart below explains some of the major provisions of the two tax bills, as well as how they compare to each other and to current tax law.  If you have questions about how the proposed changes may affect your situation, please give us a call.

 

Category Current Law House GOP Plan (as passed 11/16/2017) Proposed Senate GOP Plan (as of 11/16/2017)
Income taxes (see more detail on tax brackets below) Seven brackets:  10%, 15%, 25%, 28%, 33%, 35%, 39.6% Four brackets: 12%, 25%, 35%, 39.6% Seven brackets:  10%, 12%, 22%, 24%, 32%, 35%, 38.5%
Standard deduction $6,350 for Singles, $12,700 for married couples Increases 2018 deduction to:  $12,200 for individuals, $24,400 for married couples Increases 2018 deduction to:  $12,000 for individuals, $24,000 for married couples
Personal Exemptions $4,050 exemption each for taxpayer and spouse (if applicable) and each dependent claimed on return Eliminates Personal Exemptions Eliminates Personal Exemptions
Child Tax Credit/Family Tax Credit Provides $1,000 tax credit per child age 16 and under for families making less than $110,000 Provides $1,600 credit per child age 16 and under for families making less than $230,000.
Creates new $300 credit for each non-child dependent (i.e., children over age 16 or non-child dependent).
Creates new $300 family flexibility credit for each taxpayer and spouse (if applicable).
The Non-child dependent credit and Family Flexibility credit will expire after 2022.
Provides $2,000 credit per child age 17 and under for families making less than $500,000.  Creates new $500 credit for each non-child dependent.
Alternative Minimum Tax (AMT) Limits certain benefits for higher-income earners Eliminates AMT Eliminates AMT
Mortgage Interest Deduction Allows deduction of interest on first $1 million of mortgages for first and second home(s)
Permits deduction for interest expense on up to $100,000 of home equity indebtedness.
Limits deduction to interest on first $500,000 of mortgages for primary residence only.
No deduction for mortgage interest on second home.
No deduction for home equity interest expense.
Retains deduction of interest on first $1 million of mortgages for first and second home acquisition indebtedness.
Eliminates deduction for interest expense on home equity indebtedness.
State/local income and property tax deductions Allows deduction for state and local income tax (or sales tax), real estate tax, personal property tax. Eliminates Deductions for state and local income taxes, sales tax and real property tax.
Limits deduction for real property taxes to a maximum of $10,000.
Eliminates deductions for all state and local income taxes, sales tax, real property tax and personal property taxes.
American Opportunity Tax Credit (AOTC) Tax credit for up to $2,500 for the first $4,000 spent on tuition and fees for the first four years of undergraduate education for each eligible student.  Taxpayers must have Modified Adjusted Gross Income (“MAGI”) of less than $90,000 as a single filer or $180,000 as joint filers in order to claim the credit. Extends the AOTC credit to a fifth year, but only allows for half the credit in the final year ($1,250).  Phaseout of credit remains at $65,000 for single filers and $130,000 for joint filers. Retains AOTC under current rules
Lifetime Learning Credit Credit for 20% of up to $10,000 in qualified tuition  expenses for higher education, not limited to undergraduate education.   Taxpayers must have MAGI of less than $65,000 as a single filer or $130,000 as joint filers in order to claim the credit.  Credit is limited to $2,000 per tax return. Eliminates the Lifetime Learning Credit Retains the Lifetime Learning Credit
Other deductions Various deductions to reduce tax burden for individual filers Eliminates deductions for student loan interest, medical expenses, tax preparation fees, most personal casualty losses, tuition and fees deduction, and employee business expenses.
Denies deduction for charitable contributions that entitle donors to a right to purchase tickets to college sporting events.
Eliminates deductions for  tax preparation fees, most personal casualty losses, and employee business expenses.
Retains deduction for medical expenses and charitable contributions
Sunset provisions N/A Family Flexibility Credit and non-child dependent credit will expire as of January 1, 2023. The individual tax cuts would expire after 2025 in order to comply with a rule that requires the bill to not increase the deficit after 10 years.
Corporate tax cuts will be permanent.
Estate tax Taxes assessed on estates with total property valued at more than $5.5 million, $11 million if passed to a surviving spouse. Increases exemption to $11 million ($22 million for a surviving spouse).  Repeals tax entirely after six years. Increases exemption to $11 million ($22 million for a surviving spouse).
Corporate taxes Graduated tax rates of 15% – 35%. Flat rate of 20% for corporations starting in 2018.
Maximum rate of 25% for certain small businesses that pass on profits to owners.  Lower tax rate is not available for specified service businesses.
Flat rate of 20% for corporations starting in 2019.
Certain small businesses owners are able to deduct some earnings, but will pay ordinary tax rate on remainder. Deduction is not available for owners of specified service businesses with taxable income of greater than $500,000 for married taxpayers and $250,000 for single taxpayers.

Tax Bracket Changes

Current Law
Rate Single Married Filing Joint
10% $0-$9,525 $0-$19,050
15% $9,525-$38,700 $19,051-$77,400
25% $38,700-$93,700 $77,400-$156,150
28% $93,700-$195,450 $156,150-$237,950
33% $195,451-$424,950 $237,950-$424,950
35% $424,951-$426,700 $424,950-$480,050
39.6% Over $426,700 Over $480,050
House Bill (passed)
Rate Single Married Filing Joint
12% $0 to $45,000 $0 to $90,000
25% $45,001 – $200,000 $90,001-$260,000
35% $200,001 – $500,000 $260,001 – $1,000,000
39.6% Over $500,000 Over $1,000,000
Senate Bill (as of 11/16/17)
Rate Single Married Filing Joint
10% $0-9,525 $0-$19,050
12% $9,526-$38,700 $19,051-$77,400
22% $38,701-$70,000 $77,401-$140,000
24% $70,001-$160,000 $140,001-$320,000
32% $160,001-$200,000 $320,001-$400,000
35% $200,001-$500,000 $400,001-$1,000,000
38.5% Over $500,000 Over $1,000,000

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08Nov
3 types of information your nonprofit’s board needs
Non-profit

 

Information is power. And regularly supplying information to your not-for-profit’s board of directors is the key to the board properly fulfilling its duties. This doesn’t mean you have to share every internal email or phone message. Board members should, however, receive and understand information that will help them work together and better serve your organization.

Three types of information are important to share with your board:

1. Financial. To fulfill their fiduciary duties, the board must receive copies of your Form 990, and the board president or treasurer should review and approve it before it’s filed. The board also must get the results of any audit you’ve conducted, salary information for key staff, monthly and quarterly financial reports showing income and expenses, and proof of directors and officers insurance, if your organization provides it.

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06Nov
The ins and outs of tax on “income investments”
Investment

Many investors, especially more risk-averse ones, hold much of their portfolios in “income investments” — those that pay interest or dividends, with less emphasis on growth in value. But all income investments aren’t alike when it comes to taxes. So it’s important to be aware of the different tax treatments when managing your income investments.

Varying tax treatment

The tax treatment of investment income varies partly based on whether the income is in the form of dividends or interest. Qualified dividends are taxed at your favorable long-term capital gains tax rate (currently 0%, 15% or 20%, depending on your tax bracket) rather than at your ordinary-income tax rate (which might be as high as 39.6%). Interest income generally is taxed at ordinary-income rates. So stocks that pay dividends might be more attractive tax-wise than interest-paying income investments, such as CDs and bonds.

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02Nov
How to maximize deductions for business real estate
Business Ownership

 

Currently, a valuable income tax deduction related to real estate is for depreciation, but the depreciation period for such property is long and land itself isn’t depreciable. Whether real estate is occupied by your business or rented out, here’s how you can maximize your deductions.

Segregate personal property from buildings

Generally, buildings and improvements must be depreciated over 39 years (27.5 years for residential rental real estate and certain other types of buildings or improvements). Whereas personal property, such as furniture and equipment, generally can be depreciated over much shorter periods. Further such assets may qualify for 50% bonus depreciation or Section 179 expensing (up to $510,000 for 2017, subject to a phaseout if total asset acquisitions for the tax year exceed $2.03 million) for the year placed in service.

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31Oct
A charitable remainder trust can provide a multitude of benefits
Estate Planning

If you’re charitably inclined but concerned about having sufficient income to meet your needs, a charitable remainder trust (CRT) may be the answer. A CRT allows you to support a favorite charity while potentially boosting your cash flow, shrinking the size of your taxable estate, reducing or deferring income taxes, and enjoying investment planning advantages.

How does a CRT work?

You contribute stock or other assets to an irrevocable trust that provides you — and, if you desire, your spouse — with an income stream for life or for a term of up to 20 years. (You can name a noncharitable beneficiary other than yourself or your spouse, but there may be gift tax implications.) At the end of the trust term, the remaining trust assets are distributed to one or more charities you’ve selected.

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27Oct
Retirement savings opportunity for the self-employed
Business Ownership

Did you know that if you’re self-employed you may be able to set up a retirement plan that allows you to contribute much more than you can contribute to an IRA or even an employer-sponsored 401(k)? There’s still time to set up such a plan for 2017, and it generally isn’t hard to do. So whether you’re a “full-time” independent contractor or you’re employed but earn some self-employment income on the side, consider setting up one of the following types of retirement plans this year.  

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