Do you sit down regularly, perhaps monthly, to develop a budget reflecting your personal income and expenses? The same basic principles that apply to a household budget may be extended to your small business. In fact, it can be argued that business budgeting is now more important than ever. Here are several practical suggestions: Be…
When you hear the word “IRA,” what comes to mind? There are two basic types: the traditional IRA and the Roth IRA. It is important to know the similarities and distinctions. For starters, the annual limit for contributions to all IRAs for the 2012 tax year, in any combination, is $5,000 (increasing to $5,500 in…
The new American Taxpayer Relief Act—officially signed on January 2, 2013—averted a drastic plunge off the “fiscal cliff.” Here is a summary of the main tax provisions of interest to individual and business taxpayers. Individual Tax Provisions Income tax rates: The new law permanently retains the 10%, 15%, 25%, 28%, 33% and 35% individual income…
Beginning in 2013, a new 3.8% Medicare surtax will apply to investment income received by certain high-income taxpayers. The tax law provision authorizing this surtax was included in the Patient Protection and Affordable Care Act of 2010 recently upheld by the U.S. Supreme Court. Here’s how it works: Based on a tax return calculation, a…
The IRS recently released its annual cost-of-living adjustments for certain retirement plan thresholds in 2013. Although inflation has remained on the low side, several key limits have been bumped up, as shown below. However, note that other limits did not change. The contribution limit for IRAs also increases to $5,500 for 2013 from $5,000 for…
There are several possible reasons why you might incorporate a business. One of the main advantages unrelated to taxes is the protection of the “corporate veil” (also known as the “corporate shield”). Under this basic principle of law, a business owner cannot be held personally liable for the debts and obligations of the corporation. Nevertheless,…
The end of the year is the traditional time for supervisors to sit down with employees to conduct performance reviews. But is anyone getting much out of this tried-and-true technique? Probably not if the manager is merely doing reviews by rote. Consequently, whatever input the employees provide in these sessions is likely to fall on…
Due to recent tax law changes, you may want to give generous gifts to family members this holiday season. The gifts can reduce the size of your taxable estate. Here is a brief overview of the basic tax rules. Annual gift-tax exclusion:Under the annual gift-tax exclusion, you can give away a specified amount each year…
Beginning in 2013, a new 3.8% Medicare surtax will apply to investment income received by certain high-income taxpayers. The tax law provision authorizing this surtax was included in the Patient Protection and Affordable Care Act of 2010 recently upheld by the U.S. Supreme Court. Here’s how it works:Based on a tax return calculation, a 3.8%…
The Social Security Administration has announced that the wage base for computing Social Security tax will be $113,700 for 2013 (an increase from $110,100 in 2012). Additionally, cost-of-living adjustment (COLA) increases have been released for Social Security benefits. SS Wage Base Increases for 2013 The Social Security Wage Base is the maximum amount of wages…
