Learn more about keeping your business compliant with federal tax requirements.
America's tax system is "pay as you go." Although you may end up owing more on tax day, the taxes you are are supposed to be paid into the system over the course of the year. For wage income, this is done via wage withholding. For other income, this is done through estimated tax payments.
The home office deduction can help you save money on your taxes if you regularly and exclusively use part of your home for business.
Individuals and business owners often have more than one way to complete a taxable transaction. Tax planning evaluates various tax options to determine how to conduct business and personal transactions in order to reduce or eliminate your tax liability.
Your tax year affects your taxable income. All the income received or accrued within a single year is reported on that year's tax return, along with all the expenses paid or accrued, and the end of the year is the cut-off point for many tax-saving strategies.
It is essential that you clearly identify your business to the IRS by using the correct identification numbers and industry codes. Trouble finding the correct code to describe your business may mean you are operating more than one trade or business. This article discusses the use of various taxpayer identification numbers by businesses and tips for determining if you have more than one business for tax purposes.
The interaction between 100 percent bonus depreciation and the IRS's luxury automobile rules is complex, so the IRS is hoping to clear up any confusion.
An S corporation is a pass-through tax entity, while a C corporation is a completely separate taxpayer from its owners.
Choosing the business structure that best meets your needs is a critical decision: you must consider both non-tax and tax ramifications. This article looks at three of the most popular choices: sole proprietorships, partnerships and limited liability companies.
Sole proprietors must distinguish between Schedule C business income and other types of income when filing tax returns.
Computation of business income begins with reporting your gross receipts or sales. If your business makes or buys goods to sell and maintains an inventory, you're entitled to deduct the cost of goods sold from your revenues in computing your gross profit from your business. Valuation of inventory and identification of inventory items is important to accurately determine your income.
As a small business owner, you may entertain clients or customers. While this is often a business necessity, the costs can really add up. You'll be glad to know that the IRS allows you to take a deduction for 50 percent of your qualifying business meal entertainment expenses.
The category of travel expenses, one of the most commonly encountered types of business tax deductions, is discussed.
Expenses incurred in preparing to open a new business are deducted over 180 months, rather than all at once as they would be if the business were already operating. Typical costs include investigating whether to open a business, ordering supplies needed, and training employees.
Your filing and payment obligations and due dates generally are based on the legal form in which you operate your business: sole proprietorship, partnership; or limited liability company (LLC); C corporation or S corporation.
Because some taxpayers, particularly wealthy taxpayers, were so successful in legally minimizing their tax bills, Congress came up with another way to tax them: the alternative minimum tax (AMT). Unfortunately, the AMT now catches even "middle income" taxpayers in its net.
Every small business owner must have a basic understanding of federal income tax law. Knowing the law helps you avoid paying too much in taxes and protects you from the risk of paying too little.
Using a payroll service can reduce the aggravation associated with your employment tax responsibilities, but you remain responsible for ensuring that the obligations are actually met.
Credits for providing health insurance, starting a retirement plan, providing child-care, improving access for the disabled, or providing work to disadvantaged individuals are among the credits that many small business owners may wish to explore.
Once you have scoured your records for every available tax deduction, you need to be as diligent in chasing down any credit that you can claim. In addition to claiming all of the tax deductions that you can, you can further minimize your income tax bill by claiming all of the tax credits available to you.
You can generally deduct the cost of providing employee compensation and benefits as a business expense.
As a general rule, a business can claim a tax deduction for the salary, wages, commissions, bonuses, and other compensation it pays to its employees. However, compensation paid to business owners may be subject to serious scrutiny by the IRS.
Many home-based businesses will be able to benefit from a new, simplified method of claiming the home office deduction, starting with the 2013 tax returns. You can claim a deduction of up to $1,500 using the simplified form, provided you meet the stringent regular and exclusive use requirements. However, make sure you don't put convenience ahead of tax savings.
If you think you can benefit from the combined features of using an LLC to own and operate your small business and then having it be taxed like an S corporation, the possibility exists to establish your business as an LLC, but then make the election to have it treated as an S corporation by the IRS for tax purposes.
Generally, the cost of a capital asset must be recovered over the life of that asset. This is done via depreciation or amortization or upon the disposition of the asset. The expensing election can allow certain amounts to be deducted in the year of acquisition.
If you own a small business, incorporating now may allow you to dispose of it tax-free in the future. But you have to act before the end of 2013.
When your business is under 8 feet of water or blown to pieces, you probably aren't thinking about taxes. However, using the tax law effectively can help you get your financial feet back under you sooner.
You can check the status of your tax refund online, by telephone, or by using IRS2Go on your mobile device.
There are only a few accepted methods of safely communicating by mail with the IRS.
Before donating to a charity, verify that its tax-exempt status was not automatically revoked because it didn't file annual returns with the IRS.
Swapping goods and services generates taxable income in the eyes of the IRS.
An IRS ruling makes the business use of cell phones a less taxing affair.
An employer that withholds money from an employee's wages in response to an IRS levy is protected from legal liability, even if the employee successfully challenges the levy in court.
A child's unearned investment income may be taxed at the parents' tax rate, rather than the lower rate that would probably apply if the income was taxed to the child.
If your business has more expenses than income during its tax year, then you may have a net operating loss. This loss can be used to offset income in other years.
The Self-Employment Contributions Act (SECA) tax is the business owner's version of the FICA tax paid by employees and employers. The same contribution rates and income ceilings apply that apply to FICA tax.
When you sell, scrap, or otherwise remove a capital asset from your business, you'll have to report the change to the IRS. The good news is that long-term capital gains are taxed at a lower rate than other income, and if you have a loss on the property, you can deduct it. The bad news is that you may have ordinary income as a result of expensing or depreciation. And, you may find yourself subject to the 3.8 percent tax on Net Investment Income.
Vehicles, computers, computer peripherals, photographic equipment, audio and video equipment and other types of property that is often used for both personal and business purposes (known as "listed property") are special recordkeeping requirements and restrictions on depreciation and expensing.
Bonus depreciation (for years prior to 2014) and the expensing election enable you to deduct much of the entire cost of a capital asset in the year in which you acquire it.
You must deduct the cost of a capital asset used in your business using depreciation methods and schedules dictated by the IRS. Most assets acquired after 1986 must be depreciated using MACRS, but other methods may be allowed.
Knowing an asset's basis (which is often its cost with certain additions or subtractions) is critical in determining depreciation deductions and in establishing gain or loss when you dispose of it.
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