Social Security tax update: How high can it go?
Employees, self-employed individuals and employers all pay Social Security tax, and the amounts can get bigger every year. And yet, many people don’t fully understand the Social Security tax they pay. If you’re an employee If you’re an employee, your wages are hit with the 12.4% Social Security tax up to the annual wage ceiling. Half of the Social Security tax bill (6.2%) is withheld [...]
What are AUP engagements — and does your business need one?
In certain circumstances, businesses may need to hire CPAs to perform agreed-upon procedures (AUPs) instead of (or in addition to) a review or an audit. AUPs are a type of attestation engagement “in which a practitioner performs specific procedures on subject matter and reports the findings without providing an opinion or conclusion,” according to the standards set forth by the American Institute of Certified Public [...]
The tax consequences of selling mutual funds
Do you invest in mutual funds or are you interested in putting some money into them? If so, you’re part of a large group. According to the Investment Company Institute, 116 million individual U.S. investors owned mutual funds in 2023. But despite their widespread use, the tax rules involved in selling mutual fund shares can be complex. Review the basic rules Let’s say you sell [...]
Why auditors monitor journal entries
With a median loss of $766,000, financial misstatement schemes are the costliest type of fraud, according to “Occupational Fraud 2024: A Report to the Nations,” a study published by the Association of Certified Fraud Examiners. Fortunately, auditors and forensic accountants may be able to detect financial statement fraud by testing journal entries for errors and irregularities. Here’s what they look for and how these tests [...]
Paid FML Credit to expire
In the U.S. House of Representatives, a bill was recently introduced that would extend and enhance the Paid Family and Medical Leave Credit (under IRC Section 45S). The bill proposes, among other things, to expand eligibility by reducing the minimum employment period for qualifying employees from one year to six months. The bill has broad bipartisan support and aligns with a Senate bill introduced earlier [...]
House rich but cash poor? Consider a reverse mortgage strategy
Are you an older taxpayer who owns a house that has appreciated greatly? At the same time, you may need income. Thankfully, there could be a solution with a tax-saving bonus. It involves taking out a reverse mortgage. Reverse mortgage basics With a reverse mortgage, the borrower doesn’t make payments to the lender to pay down the mortgage principal over time. Instead, the reverse happens. [...]
Bookkeeping provides a solid foundation for financial reporting
There are currently more than 33 million small businesses in the United States, according to the U.S. Chamber of Commerce. To succeed in today’s competitive markets, it’s essential for your business organization to have accurate books and records. Bookkeeping vs. accounting For starters, you should understand the distinction between bookkeeping and accounting. Bookkeeping refers to the systematic storing of financial documentation, such as receipts, purchase [...]
Do not ignore your tax debt!
Ignoring the IRS doesn’t make it go away. While the tax agency is generally willing to work with taxpayers who dispute their tax bills or need more time to pay, cooperation is key. In one case, the owner of a boat and RV storage facility owed unpaid federal income and self-employment taxes, as well as penalties and interest, for two tax years. It amounted to [...]
You may be entitled to tax breaks if caring for an elderly relative
There are many rewards for taking care of an elderly relative. They may include feeling needed, making a difference in the person’s life and allowing the person to receive quality care. In addition, you could also be eligible for tax breaks. Here’s a rundown of four of them: 1. Medical expenses. If the individual qualifies as your “medical dependent” and you itemize deductions on your [...]
Auditing warehouse operations
When you hear the word “audit,” you might automatically associate it with financial reporting or the IRS. But auditing warehouse operations might also be beneficial for some businesses, such as manufacturers, distributors and retailers. Awkward or repetitive movements by employees, oversized packages and disorganized layouts can slow down productivity and even lead to medical and disability claims. Small adjustments can make a big difference in [...]
Beware of SCAMS!
The IRS continues to warn the public about tax-related scams and myths making the rounds on social media. The scams involve the Fuel Tax Credit, a COVID-19-related employer credit for employees taking sick and family leave during the pandemic, household employment taxes and overstated withholding. These scams are aimed at helping taxpayers use false and questionable information to obtain huge refunds. The IRS said thousands [...]
A three-step strategy to save tax when selling appreciated vacant land
Let’s say you own one or more vacant lots. The property has appreciated greatly and you’re ready to sell. Or maybe you have a parcel of appreciated land that you want to subdivide into lots, develop them and sell them off for a big profit. Either way, you’ll incur a tax bill. For purposes of these examples, let’s assume that you own the vacant land [...]
Best practices for expense reporting
When it comes to expense reporting, having rigorous financial controls is critical to operating a profitable business. You should monitor expenditures incurred by employees on behalf of the company. This enables your organization to track spending, control costs and maintain accurate financial records. Establishing and adhering to strong policies, using technology correctly and complying with tax regulations are important ways to ensure accurate expense reports. [...]
Are you an “Innocent spouse”? IRS may not think so!
“Innocent spouse” relief may protect individuals from additional tax and penalties if they’ve filed joint tax returns with spouses or ex-spouses who underreported income without their knowledge. But as a recent U.S. Tax Court case showed, such relief isn’t available in every situation. After the IRS wrongly paid a refund to a divorced couple, the IRS sought to recoup it. The wife requested equitable relief [...]