IRA Recharacterizations: What the Current Tax Law Allows
When you convert a traditional IRA into a Roth IRA and then reverse the transaction by switching the account back to its original status, the reversal is called a recharacterization. Similarly, making an annual contribution to one type of IRA and then reversing it to another type is also a recharacterization. But for Roth conversions done in…
The Half Million Dollar Baby
The true cost of having a kid. What does it actually cost to raise a child? A hospital bill for a childbirth can run quite high. Births can cost as much as $70,908, depending on a wide variety of factors.1 Not to mention the costs associated with prenatal care. Kids have to eat. Food cost…
How to Deduct Legal Expenses
Legal expenses incurred by individuals are typically not currently deductible under the federal income tax rules. Instead, they’re most often treated as either personal outlays (which are nondeductible) or as part of the cost of acquiring an asset, such as real estate. When Can You Claim a Nonbusiness Deduction for Legal Expenses? As stated in the…
More businesses will have to charge sales tax in more states under recent U.S. Supreme Court ruling
By: Karen T. Syrylo, CPA States no longer need to restrict their sales tax collection requirements to only sellers that have a physical presence in the state, according to the June 21, 2018 decision by the U.S. Supreme Court in South Dakota v. Wayfair. The result is that sellers that deal with their customers only…
New Law, New Limit on Deductions for Business Interest Expense
The Tax Cuts and Jobs Act (TCJA) imposes a new limitation on deductions for business interest expense. This is a permanent change for tax years beginning in 2018 and beyond. Will your business be affected? Here’s what you need to know. 3 Exceptions to the Interest Expense Limitation Many businesses will be exempt from the interest…
Dealing With Attorneys’ Contingent Fees
If you agree to a contingent-fee arrangement with your attorney, you may wonder whether the expense is deductible for federal income tax purposes. Unfortunately, the guidance on this controversial issue isn’t favorable to taxpayers in most situations. History Lesson Some court decisions have concluded that an individual claimant must: Include 100% of the taxable portion of…
Tax Planning for Payments to Buy Out an Exiting Partner
Sooner or later, your firm will encounter the issue of buying out a partner. This may be due to the partner’s retirement, death or other reasons. The federal income tax rules for partnership payments to buy out an exiting partner’s interest are tricky, but they also open up tax planning opportunities. The Basic Tax Rules Payments…
Maintain a Healthy Cash Flow
In today’s economic environment, one major concern for businesses is maintaining a healthy cash flow. If your company is feeling the squeeze of a tight economy — and tight credit — its ability to manage cash flow is critical. Enterprises that successfully practice good cash management generally survive and prosper. Those that don’t are likely to…
Unpaid Workers Can Surprise You
Casual labor can be dangerous! Hard to believe, but an administrative assistant wrote to an advice columnist. This person was frustrated looking for a new job and complained about “The Working Interview.” It seems the applicant actually had worked two days at one company and three days at another company without getting paid and without getting hired….
When Not-for-Profit Organizations Join Hands
It doesn’t happen often, but sometimes not-for-profit organizations merge or are incorporated into one another. For example, your not-for-profit may be contemplating an acquisition of a smaller organization or perhaps you may be merged into a larger organization. In either event, this represents a significant change for managers both personally and professionally. What causes not-for-profit organizations…