Tax Tips Archives - Fort Worth CPA Adam Traywick

Using Your 401(k) Plan to Save This Year and Next

By contributing to a tax-advantaged retirement plan you can reduce taxes and save for retirement. If your employer offers a 401(k) or Roth 401(k) plan, contributing to it is a taxwise way to build a nest egg. 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. With a 401(k), an employee elects to have a certain...

Small Businesses: Get Ready for Your 1099-MISC Reporting Requirements

Your business may be required to comply with rules to report amounts paid to independent contractors, vendors, and others a month after the New Year begins. This may include sending 1099-MISC forms to those whom you pay nonemployee compensation, and filing copies of these with the IRS. This task can be time consuming and there are penalties for not complying, so it’s a good idea to begin gathering information early to help ensure smooth filing. Deadline There are many types of 1099 forms. For example, 1099-INT is sent out to report interest income and 1099-B is used to report broker...

You May be ABLE to Save for a Disabled Family Member with a Tax-Advantaged Account

There’s a tax-advantaged way for people to save for the needs of family members with disabilities and it won’t affect their eligibility for government benefits to which they’re entitled. It can be done though an Achieving a Better Life Experience (ABLE) account, which is a tax-free account that can be used for disability-related expenses. Eligibility ABLE accounts can be created by eligible individuals to support themselves, by family members to support their dependents, or by guardians for the benefit of the individuals for whom they’re responsible. Eligible individuals must be blind or...

Small Businesses: Stay Clear of a Severe Payroll Tax Penalty

One of the most labor-intensive tasks for small businesses is managing payroll. But it’s critical that you not only withhold the right amount of taxes from your employees’ paychecks but that you also pay them over to the federal government on time. If you willfully fail to do so, you could personally be hit with the Trust Fund Recovery Penalty, also known as the 100% penalty. The penalty applies to the Social Security and income taxes required to be withheld by a business from its employees’ wages. Since these taxes are considered to be property of the government, the employer holds them in...

IRA Charitable Donations Are an Alternative to Taxable Required Distributions

Are you charitably minded and have a significant amount of money in an IRA? If you’re age 70½ or older (and don’t need the money from required minimum distributions) you may benefit by giving these amounts to charity. IRA distribution basics A popular way to transfer IRA assets to charity is through a tax provision that allows IRA owners age 70½ or older to give up to $100,000 per year of their IRA distributions to charity. These distributions are called qualified charitable distributions, or QCDs. The money given to charity counts toward the donor’s required minimum distributions (RMDs),...

Thinking About Converting From a C Corporation to an S Corporation?

Choosing the right entity can make a difference in the tax bill you owe for your business. Although S corporations can provide substantial tax advantages over C corporations in some circumstances, there are plenty of potentially expensive tax problems you should assess before making the decision to convert from a C corporation to an S corporation. Here’s a quick rundown of four issues to consider: LIFO inventories. C corporations that use last-in, first-out (LIFO) inventories must pay tax on the benefits they derived by using LIFO if they convert to S corporations. This tax can be spread...