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Adam’s Tax Accounting Service Blog

Note: Tax advice, articles, and content contained on this site are intended for informational and educational purposes only. They are not a substitute for professional advice. Tax matters are can be extremely complex and vary greatly for each individual or company. Please click here to read our complete disclosure and disclaimer for the information presented on this site.

Tax Pros and Cons of Buying or Selling Businesses in Installments

Posted by on Oct 27, 2016 in Blog, General, Management, Tax Tips | Comments Off on Tax Pros and Cons of Buying or Selling Businesses in Installments

Tax Pros and Cons of Buying or Selling Businesses in Installments

Whether you’re selling your business or acquiring another company, the tax consequences can have a major impact on the transaction’s success or failure. Consider installment sales, for example. The sale of a business might be structured as an installment sale if the buyer lacks sufficient cash or pays a contingent amount based on the business’s performance. And it sometimes — but not always — can offer the seller tax advantages. Pluses An installment sale may make sense if the seller wishes to spread the gain over a number of years. From a...

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What the Self-employed Need To Know About Employment Taxes

Posted by on Oct 24, 2016 in Blog, General, Management, Tax Tips | Comments Off on What the Self-employed Need To Know About Employment Taxes

What the Self-employed Need To Know About Employment Taxes

In addition to income tax, Social Security and Medicare taxes are collected on earned income, such as salary and self-employment income. The 12.4% Social Security tax applies only up to the Social Security wage base ($118,500 for 2016.) All earned income is subject to the 2.9% Medicare tax. These taxes are split equally between the employee and the employer. But if you’re self-employed, you pay both the employee and employer portions of these taxes on your self-employment income. Additional 0.9% Medicare tax Another employment tax that...

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Are You Coordinating Your Income Tax Planning With Your Estate Plan?

Posted by on Oct 20, 2016 in Blog, General, Management, Tax Tips | Comments Off on Are You Coordinating Your Income Tax Planning With Your Estate Plan?

Are You Coordinating Your Income Tax Planning With Your Estate Plan?

Until recently, estate planning strategies typically focused on minimizing federal gift and estate taxes, such as by giving away assets during life to reduce the taxable estate. Today, however, the focus has moved toward income taxes, making the coordination of income tax planning and estate planning more important. Why the change? Since 2001, the federal exemption has grown from $675,000 to $5.45 million, this change means fewer people have to worry about gift and estate tax liability. Additionally, the top gift and estate tax rate has...

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Are You Timing Business Income And Expenses To Your Tax Advantage?

Posted by on Oct 17, 2016 in Blog, General, Management, Tax Tips | Comments Off on Are You Timing Business Income And Expenses To Your Tax Advantage?

Are You Timing Business Income And Expenses To Your Tax Advantage?

Generally speaking, it’s always better to defer tax. One way is through controlling when your business recognizes income and incurs deductible expenses. Here are two timing strategies that can help businesses do this: Defer income to next year. If your business uses the cash method of accounting, you can defer billing for your products or services. Or, if you use the accrual method, you can delay shipping products or delivering services. Accelerate deductible expenses into the current year. If you’re a cash-basis taxpayer, you may make a...

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Help Retain Employees With Tax-free Fringe Benefits

Posted by on Oct 10, 2016 in Blog, General, Management, Tax Tips | Comments Off on Help Retain Employees With Tax-free Fringe Benefits

Help Retain Employees With Tax-free Fringe Benefits

One of the ways your business can find and keep valuable employees is to offer an attractive compensation package. Fringe benefits are an important incentive — especially those that are tax-free. Here’s a rundown of some common perks and their tax implications. Medical coverage. If you maintain a health care plan for employees, coverage under the plan isn’t taxable to them. Employee contributions are excluded from income if pretax coverage is elected under a cafeteria plan. Otherwise, such amounts are included in their wages, but are...

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Tax-smart Options For Your Old Retirement Plan When You Change Jobs

Posted by on Oct 6, 2016 in Blog, General, Management, Tax Tips | Comments Off on Tax-smart Options For Your Old Retirement Plan When You Change Jobs

Tax-smart Options For Your Old Retirement Plan When You Change Jobs

When you change jobs you have a lot to think about. It’s easy for your 401(k) or other employer-sponsored retirement plan to get lost in the shuffle. But to keep building tax-deferred savings, it’s important to make an informed decision about your old plan. First and foremost, don’t take a lump-sum distribution from your old employer’s retirement plan. It generally will be taxable and, if you’re under age 59½, subject to a 10% early-withdrawal penalty. Here are three tax-smart alternatives: Stay put. You may be able to leave your money in...

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Prepaid Tuition Vs. College Savings: Which Type Of 529 Plan Is Better?

Posted by on Oct 6, 2016 in Blog, General, Management, Tax Tips | Comments Off on Prepaid Tuition Vs. College Savings: Which Type Of 529 Plan Is Better?

Prepaid Tuition Vs. College Savings: Which Type Of 529 Plan Is Better?

Section 529 plans provide a tax-advantaged way to help pay for college expenses. Here are just a few of the benefits: Although contributions aren’t deductible for federal purposes, plan assets can grow tax-deferred. Some states offer tax incentives for contributing in the form of deductions or credits. The plans usually offer high contribution limits, and there are no income limits for contributing. Prepaid tuition plans With this type of 529 plan, if your contract is for four years of tuition, tuition is guaranteed regardless of its cost at...

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Businesses Can Also Be Disrupted By Tax Identity Theft

Posted by on Oct 3, 2016 in Blog, General, Management, Tax Tips | Comments Off on Businesses Can Also Be Disrupted By Tax Identity Theft

Businesses Can Also Be Disrupted By Tax Identity Theft

A lot of attention is paid to individual tax identity theft — when a taxpayer’s personal information (including Social Security number) is used to fraudulently obtain a refund or commit other crimes. But businesses can be victims of tax identity theft too. Significant consequences Business tax identity theft occurs when a criminal uses the identifying information of a business, without permission, to obtain tax benefits or to enable identity theft schemes to be perpetrated on individuals. An identity thief could use an Employer Identification...

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Time May Be Running Out (Again) For Tax-free Treatment Of Home Mortgage Debt Forgiveness

Posted by on Sep 29, 2016 in Blog, General, Management, Tax Tips | Comments Off on Time May Be Running Out (Again) For Tax-free Treatment Of Home Mortgage Debt Forgiveness

Time May Be Running Out (Again) For Tax-free Treatment Of Home Mortgage Debt Forgiveness

Income tax generally applies to all forms of income, including cancellation-of-debt (COD) income. Because if a creditor forgives a debt, you avoid the expense of making the payments, which increases your net income. Fortunately, since 2007, homeowners have been allowed to exclude up to $2 million in cancellation-of-debt (COD) income ($1 million for married taxpayers filing separately) in connection with qualified principal residence indebtedness (QPRI) from their taxable income. The exclusion had been available only for debts forgiven through...

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Documentation Is The Key To Business Expense Deductions

Posted by on Sep 26, 2016 in Blog, General, Management, Tax Tips | Comments Off on Documentation Is The Key To Business Expense Deductions

Documentation Is The Key To Business Expense Deductions

If your records are incomplete or missing and you get audited by the IRS, your business will likely lose out on valuable deductions. These two recent U.S. Tax Court cases that help illustrate the rules for documenting deductions. Case 1: Insufficient records In the first case, the court found a taxpayer with a consulting business provided no proof to substantiate more than $52,000 in advertising expenses and $12,000 in travel expenses for the two years in question. The business owner said the travel expenses were incurred “caring for his...

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