tax - Linkenheimer LLP CPAs & Advisors

Important Reminder for 2022 & 2023 Deferred Tax Payments Due to California Flood Relief

As a friendly reminder, please note that for California residents who took advantage of the tax payment deferral provided by California flood relief, the deferred tax payment deadline is approaching on October 16th. For those qualifying for deferment, all 2022 balance due and 2023 Q1 through Q3 estimates are due on this date. Both the IRS and the California Franchise Tax Board (FTB) have emphasized the importance of meeting this extended deadline to avoid potential penalties and interest. If you have any questions or need assistance in ensuring your taxes are appropriately addressed, our team is here to support you.

By Linkenheimer LLP|2023-10-09T16:33:31+00:00October 9th, 2023|CA tax, tax deadlines|0 Comments

It’s Important to Understand How Taxes factor into M&A Transactions

In recent years, merger and acquisition activity has been strong in many industries. If your business is considering merging with or acquiring another business, it’s important to understand how the transaction will be taxed under current law.

Stocks vs. assets

From a tax standpoint, a transaction can basically be structured in two ways:

1. Stock (or ownership interest) sale. A buyer can directly purchase a seller’s ownership interest if the target business is operated as a C or S corporation, a partnership, or a limited liability company (LLC) that’s treated as a partnership for tax purposes.

The now-permanent 21% corporate federal income tax rate under the Tax Cuts and Jobs Act (TCJA) makes buying the stock of a C corporation somewhat more attractive. Reasons: The corporation will pay less tax and generate more after-tax income. Plus, any built-in gains from appreciated corporate assets […]

By Linkenheimer LLP|2023-09-18T18:42:33+00:00September 18th, 2023|M&A|0 Comments

Reduce the Impact of the 3.8% Net Investment Income Tax

High-income taxpayers face a regular income tax rate of 35% or 37%. And they may also have to pay a 3.8% net investment income tax (NIIT) that’s imposed in addition to regular income tax. Fortunately, there are some ways you may be able to reduce its impact.

Affected taxpayers

The NIIT applies to you only if modified adjusted gross income (MAGI) exceeds:

$250,000 for married taxpayers filing jointly and surviving spouses,
$125,000 for married taxpayers filing separately,
$200,000 for unmarried taxpayers and heads of household.

The amount subject to the tax is the lesser of your net investment income or the amount by which your MAGI exceeds the threshold ($250,000, $200,000, or $125,000) that applies to you.

Net investment income includes interest, dividend, annuity, royalty and rental income, unless those items were derived in the ordinary course of an active trade or business. In addition, other gross income from a trade or business that’s a passive activity is subject to the NIIT, as is income from a business trading in financial instruments or commodities.

There are many types of income that are exempt from the NIIT. For example, tax-exempt interest and the excluded gain from the sale […]

By Linkenheimer LLP|2023-06-06T14:52:58+00:00June 6th, 2023|investment, tax planning|0 Comments

The 2022 Gift Tax Return Deadline is Coming Up Soon

Did you make large gifts to your children, grandchildren or other heirs last year? If so, it’s important to determine whether you’re required to file a 2022 gift tax return. And in some cases, even if it’s not required to file one, you may want to do so anyway.

Filing requirements

The annual gift tax exclusion has increased in 2023 to $17,000 but was $16,000 for 2022. Generally, you must file a gift tax return for 2022 if, during the tax year, you made gifts:

That exceeded the $16,000-per-recipient gift tax annual exclusion for 2022 (other than to your U.S. citizen spouse),
That you wish to split with your spouse to take advantage of your combined $32,000 annual exclusion for 2022,
That exceeded the $164,000 annual exclusion in 2022 for gifts to a noncitizen spouse,
To a Section 529 college savings plan and wish to accelerate up to five years’ worth of annual exclusions ($80,000) into 2022,
Of future interests — such as remainder interests in a trust — regardless of the amount, or
Of jointly held or community property.

Keep in mind that you’ll owe gift tax only to the extent that an exclusion […]

By Linkenheimer LLP|2023-03-14T19:06:37+00:00March 14th, 2023|gift tax|0 Comments

Employers: In 2023, The Social Security Wage Base Is Going Up

The Social Security Administration recently announced that the wage base for computing Social Security tax will increase to $160,200 for 2023 (up from $147,000 for 2022). Wages and self-employment income above this threshold aren’t subject to Social Security tax.

Basics about Social Security

The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees and self-employed workers. One is for the Old Age, Survivors and Disability Insurance program, which is commonly known as Social Security. The other is for the Hospital Insurance program, which is commonly known as Medicare.

There’s a maximum amount of compensation subject to the Social Security tax, but no maximum for Medicare tax. For 2023, the FICA tax rate for employers is 7.65% — 6.2% for Social Security and 1.45% for Medicare (the same as in 2022).

2023 updates

For 2023, an employee will pay:

6.2% Social Security tax on the first $160,200 of wages (6.2% of $160,200 makes the maximum tax $9,932.40), plus
1.45% Medicare tax on the first $200,000 of wages ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return), plus
2.35% Medicare tax (regular 1.45% Medicare tax plus 0.9% additional Medicare tax) on all wages in […]

By Linkenheimer LLP|2022-10-26T23:20:58+00:00October 26th, 2022|social security, tax|0 Comments