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Management

Which Tax-Advantaged Health Account Should Be Part of Your Benefits Package?

Which Tax-Advantaged Health Account Should Be Part of Your Benefits Package?

An executive order was signed on October 12th that, among other things, seeks to expand Health Reimbursement Arrangements (HRAs). HRAs are just one type of tax-advantaged account you can provide your employees to help fund their health care expenses. Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are also available. Which one should you include in your benefits package? Here’s a look at the similarities and differences: HRA. An HRA is an employer-sponsored account that reimburses employees for medical expenses. Contributions are excluded from taxable income and there’s...

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“Bunching” Medical Expenses Will Be a Tax-Smart Strategy for Many in 2017

“Bunching” Medical Expenses Will Be a Tax-Smart Strategy for Many in 2017

Various limits apply to most tax deductions, and one type of limit is a “floor,” which means expenses are deductible only if they exceed that floor (typically a specific percentage of your income). An example of this is the medical expense deduction. Because it can be difficult to exceed the floor, a common strategy is to “bunch” deductible medical expenses into a particular year where possible. If tax reform legislation is signed into law, it might be especially beneficial to bunch deductible medical expenses into 2017. The deduction Medical expenses that aren’t reimbursable by insurance or...

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Timing Strategies Could Become More Powerful in 2017, Depending on What Happens with Tax Reform

Timing Strategies Could Become More Powerful in 2017, Depending on What Happens with Tax Reform

Projecting your business income and expenses for this year and the next allows you to time when you recognize income and incur deductible expenses to your tax advantage. Typically, it’s better to defer tax. If tax reform legislation is signed into law this might end up being especially true this year. Timing strategies for businesses Here are two timing strategies that can help businesses defer taxes: 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...

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Investors: Beware of the wash sale rule

Investors: Beware of the wash sale rule

A tried-and-true tax-saving strategy for investors is to sell assets at a loss to offset gains that have been realized during the year. If you’ve cashed in some big gains this year, consider looking for unrealized losses in your portfolio and selling those investments before the end of the year to offset your gains. This can reduce your 2017 tax liability. But what if you expect an investment that would produce a loss if sold now to recover and possibly thrive in the future? Or perhaps you simply want to minimize the impact on your asset allocation. You may think you can simply sell the...

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Why You Should Boost Your 401(k) Contribution Rate Between Now and Year End

Why You Should Boost Your 401(k) Contribution Rate Between Now and Year End

An important step to reducing taxes and saving for retirement is to contribute to a tax-advantaged retirement plan. If your employer offers a 401(k) plan, contributing to that is likely your best first step. If you’re not already contributing the maximum allowed, consider increasing your contribution rate between now and the end of the year. Because of tax-deferred compounding (tax-free in the case of Roth accounts), boosting contributions sooner rather than later can have a significant impact on the size of your nest egg at retirement. Traditional 401(k) A traditional 401(k) offers many...

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Should Your Business Use Per Diem Rates For Travel Reimbursement?

Should Your Business Use Per Diem Rates For Travel Reimbursement?

Travel per diem rates have been updated and will go into effect on October 1st. To simplify record keeping, they can be used for reimbursement of ordinary and normal business expenses incurred while employees travel away from home. Per diem advantages As long as employees properly account for their business-travel expenses, reimbursements are generally tax-free to the employees and deductible by the employer. But keeping track of actual costs can be a headache. With the per diem rates, employees just need to document the time, place and business purpose of the travel. They don’t have to keep...

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