Do you think pulling the plug on a failed contract would be “wasting all the money” your business has spent to date? If so, you may be making the choice based on emotion and “sunk costs.” Sunk costs are past expenses that are irrelevant to current decisions – such as those spent on non-performing contracts. Why are they irrelevant? Because...
Tags: sunk costs
Category: Business
Did you buy equipment or other business assets during 2015? Here are the current rules for maximizing your tax deduction. Section 179. Under code Section 179, you can expense many types of otherwise depreciable property used in your business. Both new and used assets qualify for Section 179.Planning tip: The Section 179 amounts are now permanent. Beginning in 2016, both...
Tags: depreciation
Category: Taxes
Have you filed required Forms 1099 for 2015? The forms were due by February 1 to individuals you paid $600 or more in the course of your business during the year. If you haven’t completed Forms 1099, you’ll want to do so as soon as possible. The penalties for failing to file range from $50 to $250 per form, depending...
Tags: 1099 penalties
Category: Taxes
You might believe a “dependent” is a minor child who lives with you. While that is essentially correct, dependents can include parents, other relatives and nonrelatives, and even children who don’t live with you. Here’s an overview of the dependency exemption. Exemptions and your taxable income. Each dependent deduction is worth $4,000 on your 2015 federal income tax return, and...
Tags: dependents
Category: Taxes
Did you have health insurance in 2015? If not, you may owe a penalty on your federal income tax return. For 2015 returns, the penalty is the higher of a flat dollar amount or a percentage of your household income. The flat dollar amount is $325 per adult and $162.50 per child under age 18, up to a maximum of...
Tags: Health Insurance
Category: Taxes
While retirement plan contribution limits have not increased for 2016, taking full advantage of allowable contributions and any amounts your employer matches is still a good idea. Contributions you make to employer-sponsored retirement plans reduce your taxable income because your employer deducts the amount you specify from your paycheck before taxes. For 2016, you can contribute $18,000 to your 401(k),...
Tags: retirement
Category: Taxes
You may be most familiar with Form 1099-MISC, which you use when your business makes miscellaneous payments in excess of $600 for services to nonemployees. What are miscellaneous payments? Reportable payments can include fees for services paid to independent contractors, such as consultants, lawyers, and cleaning services. Generally, you don’t report fees paid to corporations, but there are exceptions (payments...
Tags: 1099 filings
Category: Taxes
With some exceptions, the federal minimum wage is $7.25 per hour. But your state may require you to pay a different rate, and that rate may have changed as of January 1. (Massachusetts is now $10/Hr) When employees are subject to both state and federal minimum wage laws, the law says you need to pay the higher of the two....
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Category: Uncategorized
The IRS has launched a new campaign to encourage you to protect your tax and financial data, both digital and paper. As part of the campaign, the IRS plans to release videos and consumer friendly tax tips, and sponsor local events across the country. You can get started by reading the new Publication 4524, Security Awareness for Taxpayers, on the...
Tags: Identity Theft
Category: Taxes
Well-documented corporate minutes can provide valuable supporting evidence if the IRS questions choices you make on your tax returns. Minutes are especially important when related-party transactions are involved, such as payments, loans, or distributions between the company and you or other owners. Another area to consider is the amount of earnings your business retains instead of distributing the funds as...