From the category archives:

Taxes

Your tax season did not start this year on January 1 as it always has in past years. Instead the earliest you can file your 2013 forms is January 31, 2014. The IRS needs the extra lead time to get ready because they were a part if the government shut down last September. That does not change the April 15 final filing date, nor any other payment due dates.

The delayed filing date probably will impact your business only if you operate a bookkeeping service or are a seasonal tax preparer. A friend told me of an independent tax professional who contacted him with a pre-tax offer, for a small downpayment now he will do a pre-tax assessment to see to see where my fiend stood. The balance is due at the final filing. I predict that this tax guy will go far as an entrepreneur. He is a problem solver for himself and his clients.

The tax guy’s pre-tax peek may bring a few surprises to his customers. Here is what you can expect to see on your return when filing season starts:

  • If you are among the higher income taxpayers don’t be surprised to learn you will pay more for 2013 and in 2014.
  • Individual taxpayers earning $450,000 or for married couples filing jointly, will pay 39.6% tax.
  • In 2014, all tax payers must have health insurance, either private or through the Affordable Care Act. So unless you meet certain criteria, you will have to pay up. IRS calls this a shared responsibility payment. Call it what you will, it will cost you either 1% of your taxable income or a flat fee of $95 per uninsured adult and $47.50 per child (up to $285 for a family) per month, whichever amount is higher. This ‘shared responsibility’ skyrockets in 2015 and 2016.
  • Home office expense has been simplified for the self employed. The deduction is equal to $5/square foot of home office space – up to a maximum of 300 square feet. It’s an easy calculation, but if you prefer, you can still figure out your own expenses and pro-rate them.
  • Last year, Section 179 expense deduction allowed business owners to take expense costs of up to  $500,000 of qualifying assets, but in  2014, the limit drops to $25,000.
  • Also gone this year is the deduction of up to $4,000 for qualified tuition and related expenses that you paid for yourself, your spouse, or a dependent.

Moreover, 55 tax breaks expired at the end of 2013 so to avoid more surprises, this year especially, check with a tax professional before filing your taxes. What was a great deduction last year may be disallowed this year.

{ 0 comments }

The Ghost of 2013 still lives according to IRS

Two weeks ago we tooted out the old year and toasted in the new one. If we think 2013 is over and can be forgotten, then we have jumped the gun. To the IRS, January 15, 2014, marks the last chance for owners of small businesses to pay their 2013 quarterly tax withholdings.

IRS requires that you withhold an amount equal to the amount of tax paid in 2012 or 90% of your 2013 tax tab. I like the method of using the tax I paid last year. There are so many rules and regulations in exactly guessing what I will owe next April I wouldn’t trust it. I would not choose that unless I had a large change in revenue this year.  You will want to look, but remember that cutting it too fine may incur penalties.

Another case of extending 2013 well into the new calendar year is that you have until mid-April to contribute to your IRA. If you have made contributions to your individual 401K as an employee of your business, you have until April to match the workers contributions.

It is probably worth your while to plan your finances now for the year ahead, in particular your contributions toward retirement. If you don’t have a clear strategy, perhaps now is the time to develop one. Social Security, while still valuable to most of us, is not a replacement for a retirement plan. As a business owner, it is all on your shoulders.

If you do establish a plan for yourself and your employees, it is always wise to make sure that it is effective and efficient and that you are executing it well. Sound advice and solid information abounds on line from the most reputable brokers such as Vanguard and Fidelity. Start with their free knowledge.

{ 0 comments }

Google+