Valuing Employee Stock Ownership Plans (ESOPs)
Employee stock ownership plans (ESOPs) provide tax-saving opportunities for business owners who want to cash out and transfer ownership to employees without immediately giving up control of the business. However, valuing stock held by an ESOP is an ongoing challenge for the fiduciaries who administer them, especially when the sponsoring company is privately held. Valuation…
Work or Pleasure: The Tax Rules for Hybrid Travel
With business travel picking up again and summer fast approaching, many business owners may be mulling trips that combine work with vacation or other personal activities. A quick refresher on the IRS rules related to deducting business vs. personal travel costs can help you reduce your tax bill next year. General Requirements Business expenses must…
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…
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…
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…
Tips for Easier Tax Filing in 2022
By Jennifer Galstad-Lee | Senior Manager, Tax The U.S. tax filing season is officially underway! The IRS has started accepting and processing income tax returns for the 2021 tax-year as of Monday, January 24, 2022. Filing Basics for Individuals Remember that most income is taxable. Be sure to keep records for income items, including: Forms…
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…