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Who in a small business can be hit with the “Trust Fund Recovery Penalty?”
- Jul 17, 2021
- By Dukhon Tax
- In Business, Business Taxes
There’s a harsh tax penalty that you could be at risk for paying personally if you own or manage a business with employees. It’s called the “Trust Fund Recovery Penalty,” which applies to the Social Security and income taxes required to be withheld by a business from its employees’ wages. Because taxes are considered property of the government, the employer…
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10 facts about the pass-through deduction for qualified business income
- Jul 16, 2021
- By Dukhon Tax
- In Business, Business Taxes
Are you eligible to take the deduction for qualified business income (QBI)? Here are 10 facts about this valuable tax break, referred to as the pass-through deduction, QBI deduction or Section 199A deduction. It’s available to owners of sole proprietorships, single member limited liability companies (LLCs), partnerships and S corporations. It may also be claimed by trusts and estates. The…
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IRS extends administrative relief for 401(k) plans
- Jul 16, 2021
- By Dukhon Tax
- In Business, Business Taxes, IRS Bulletins
As mitigation measures related to COVID-19 ease, it will be interesting to see which practices and regulatory changes taken in response to the pandemic remain in place long-term. One of them might be relief from a sometimes-inconvenient requirement related to the administration of 401(k) plans. A virtual solution In IRS Notice 2021-40, the IRS recently announced a 12-month extension of…
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Can taxpayers who manage their own investment portfolios deduct related expenses? It depends
- Jul 15, 2021
- By Dukhon Tax
- In Business, Individual Tax, Tax Advice, Tax Cuts, Tax Tips
Do you have significant investment-related expenses, including the cost of subscriptions to financial services, home office expenses, and clerical costs? Under current tax law, these expenses aren’t deductible through 2025 if they’re considered investment expenses for the production of income. But they’re deductible if they’re considered trade or business expenses. For years before 2018, production-of-income expenses were deductible, but they…
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IRS audits may be increasing, so be prepared
- Jul 12, 2021
- By Dukhon Tax
- In Individual Tax, IRS Audits
The IRS just released its audit statistics for the 2020 fiscal year and fewer taxpayers had their returns examined as compared with prior years. But even though a small percentage of returns are being chosen for audit these days, that will be little consolation if yours is one of them. Latest statistics Overall, just 0.5% of individual tax returns were…
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Eligible Businesses: Claim the Employee Retention Tax Credit
- Jul 08, 2021
- By Dukhon Tax
- In Business, Business Taxes
The Employee Retention Tax Credit (ERTC) is a valuable tax break that was extended and modified by the American Rescue Plan Act (ARPA), enacted in March of 2021. Here’s a rundown of the rules. Background Back in March of 2020, Congress originally enacted the ERTC in the CARES Act to encourage employers to hire and retain employees during the pandemic.…
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Are you a nonworking spouse? You may still be able to contribute to an IRA
- Jul 06, 2021
- By Dukhon Tax
- In Individual Tax
Married couples may not be able to save as much as they need for retirement when one spouse doesn’t work outside the home — perhaps so that spouse can take care of children or elderly parents. In general, an IRA contribution is allowed only if a taxpayer earns compensation. However, there’s an exception involving a “spousal” IRA. It allows contributions…
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Are your company’s job descriptions pulling their weight?
- Jul 01, 2021
- By Dukhon Tax
- In Business
At many businesses, job descriptions have it easy. They were “hired” (that is, written) many years ago. They haven’t had to change or do anything, really, besides get copied and pasted into a want ad occasionally. They’re not really good at what they do, but they’re used again and again because everyone assumes they’re just fine. The problem is, they’re…
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Traveling for business again? What can you deduct?
- Jun 30, 2021
- By Dukhon Tax
- In Business, Business Taxes, Tax Planning, Tax Tips
As we continue to come out of the COVID-19 pandemic, you may be traveling again for business. Under tax law, there are several rules for deducting the cost of your out-of-town business travel within the United States. These rules apply if the business conducted out of town reasonably requires an overnight stay. Note that under the Tax Cuts and Jobs…
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Don’t assume your profitable company has strong cash flow
- Jun 29, 2021
- By Dukhon Tax
- In Business, Student Taxes, Tax Advice, Tax Planning, Tax Tips
Most of us are taught from a young age never to assume anything. Why? Well, when you assume you make an … you probably know how the rest of the expression goes. Many business owners make a dangerous assumption that if their companies are profitable, their cash flow must also be strong. But this isn’t always the case. Taking a…
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