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Split Annuities Help Retirees Meet Multiple Objectives
As Americans live longer in retirement — often for several decades — it becomes more challenging to plan for a consistently high standard of living. In addition to maintaining retirement income, split annuities help retirees pass on some wealth to their families. To achieve both of these goals, consider a split annuity. Here’s a look…
How Fringe Benefits for S Corporation Owners Are Taxed
In general, the value of statutory fringe benefits paid to employees is exempt from federal income tax. But special rules apply to how fringe benefits for S corporation owners, who own 2% or more of a company, are taxed. For these owner-employees, several fringe benefits are tax-exempt, but others — including some of the biggest…
Should You Separate Your Business from Its Real Estate?
Businesses that need real estate to conduct operations, or otherwise hold property, traditionally have put the title to the property in the name of the business itself. But owners are increasingly rethinking this approach. Many are recognizing that any short-term benefits may be outweighed by the tax, liability and estate-planning advantages associated with separating real estate…
Keep Cybercriminals from Stealing Your Business’s Brand
When criminals steal an individual’s identity, the victim can take steps to minimize potential damage by, for example, notifying credit agencies and freezing bank accounts. But what happens if a cybercrook steals a company’s identity and uses it to engage in fraud? This situation can be more complicated — and expensive — to resolve. Fraudsters who…
Financial Planning and Analysis Tools: Your Organization’s Crystal Ball
This article was published in the Spring 2022 issue of Connecticut CPA. By Jim Norton, CPA, Principal, Accounting Technology Services Budgeting. Planning. Budgeting and planning. Financial planning and analysis. FP&A. Projections. Models. Forecasts. Pro formas. These are just a handful of terms that are often used interchangeably when talking about the process of analyzing…
5 Categories of Interest Expense: What’s Deductible?
People often ask: Is the interest paid during the year deductible on my federal income tax return? The answer is, “It depends.” Generally, the interest you incurred must be allocated among the following five “baskets” for tax purposes. Based on how the interest is classified, it may be nondeductible, partially deductible or fully deductible. Other…
How to Keep Your Business Strong Despite Inflationary Pressures
Over the last year, consumer prices rose 7.9%, according to the latest data from the U.S. Bureau of Labor Statistics. The Consumer Price Index covers the prices of food, clothing, shelter, fuels, transportation, doctors’ and dentists’ services, drugs, and other goods and services that people buy for day-to-day living. This is the highest 12-month increase since…
Do LLC Members Owe Self-Employment Tax?
The federal tax code’s self-employment tax provisions were enacted long before the existence of limited liability companies (LLCs). As LLCs became increasingly popular, an important question arose: How do the self-employment tax rules apply to LLC members? Despite IRS attempts to make the issue go away, that question still exists for LLCs with several members, which…
Joint Tax Filing: Spouses Are Guilty Until Proven Innocent
When you got married, you knew it was for “better or worse.” But you might not know about laws that hold you responsible if your spouse cheats on a tax return. Married couples filing jointly should be aware that: You are both responsible for tax, interest and penalties — even after a divorce or the death…
How Much Does the IRS Let Delinquent Taxpayers Live On?
The IRS uses “Collection Financial Standards” to help determine a taxpayer’s ability to pay a delinquent tax liability. Allowable living expenses include those that meet the test of being necessary to provide for a taxpayer’s (and his or her family’s) health and welfare, as well as his or her ability to produce income. The IRS allowable living standards…
Should You Diversify Your Investments with Rental Real Estate?
Many people invest in marketable securities, including stocks, bonds, money market funds and real estate investment trusts (REITs). But a less conventional investment option that’s historically paid off for many investors is purchasing a home or condo to rent out to third parties. This alternative may help diversify your existing portfolio and hedge against public market…