We explained in Part 1, a majority of states now allow pass-through entity (PTE) owners to get around the federal $10,000 state and local tax (SALT) deduction cap on individual taxpayers by having their PTE pay state income tax on its income at the entity level.
Maybe the least popular change brought about by the Tax Cuts and Jobs Act (TCJA) was a first-ever cap on the federal personal income tax deduction for state and local taxes (SALT).
When the IRS needs to ask a question about a taxpayer’s tax return, notify them about a change to their account, or request a payment, it often mails a letter or notice to the taxpayer. Taxpayers should know that the IRS sends millions of these letters and notices to taxpayers for a variety of reasons. Many of these letters and notices can be dealt with simply, without calling or visiting an IRS office. Here’s what taxpayers should know about IRS notices and letters: The IRS sends notices and letters for the following reasons:
Business travel deductions are available when employees travel away from their tax home or principal place of work for business reasons. With inflation on the rise, business travel is more costly than ever. Hotel bills, airfare or train tickets, cab fares, and public transportation can all add up fast.
Understanding marginal and effective tax rates is important for tax planning purposes; however, many taxpayers don’t fully understand the differences. Let’s take a closer look:
For many people buying a home – whether it’s a fixer-upper in an up-and-coming neighborhood or that custom home you’ve always dreamed of – is a milestone event. While there is often a steep learning curve associated with buying and owning a home, there are also some perks – at least when it comes to taxes.
Cash flow is the lifeblood of every small business, but many business owners underestimate just how vital managing cash flow is to their business’s success. In fact, a healthy cash flow is more important than your business’s ability to deliver its goods and services.
If you’re a small business owner who is thinking about closing your business for good, you should be aware that there is more to closing a business than laying off employees, selling office furniture, and closing the doors – you must also take certain actions as required by the IRS to fulfill your tax obligations. For example, if you have employees, you must file final employment tax returns as well as make final federal tax deposits of these taxes.
Individuals with significant assets should take advantage of proven tax strategies such as gifting and direct payments to educational institutions to transfer wealth to heirs tax-free, as well as minimize estate taxes. Additional opportunities are available as well, thanks to low-interest rates and a volatile stock market. Let’s take a look at some of them:
The most common type of bankruptcy for individuals is Chapter 13, which allows individuals and small business owners in financial difficulty to repay their creditors. Often, it is a last resort for wage earners (individuals and those filing jointly as spouses), the self-employed and sole proprietor businesses to get out of their debts. While the overall bankruptcy rate has been dropping in recent years, Chapter 13 appears to be increasing, according to the US Courts. If you’re considering filing for Chapter 13, here’s what you should know about federal tax obligations: