federal

Plug in Tax Savings for Electric Vehicles

04_30_19_1010794026_ITB_560x292

While the number of plug-in electric vehicles (EVs) is still small compared with other cars on the road, it’s growing — especially in certain parts of the country. If you’re interested in purchasing an electric or hybrid vehicle, you may be eligible for a federal income tax credit of up to $7,500. (Depending on where you live, there may also be state tax breaks and other incentives.)

However, the federal tax credit is subject to a complex phaseout rule that may reduce or eliminate the tax break based on how many sales are made by a given manufacturer. The vehicles of two manufacturers have already begun to be phased out, which means they now qualify for only a partial tax credit.

Tax credit basics

You can claim the federal tax credit for buying a qualifying new (not used) plug-in EV. The credit can be worth up to $7,500. There are no income restrictions, so even wealthy people can qualify.

By |May 2nd, 2019|credit, energy, New Tax Laws, tax credit|0 Comments

Will Leasing Equipment or Buying it be More Tax Efficient for Your Business?

03_04_19_522131648_SBTB_560x292

Recent changes to federal tax law and accounting rules could affect whether you decide to lease or buy equipment or other fixed assets. Although there’s no universal “right” choice, many businesses that formerly leased assets are now deciding to buy them.

Pros and cons of leasing

From a cash flow perspective, leasing can be more attractive than buying. And leasing does provide some tax benefits: Lease payments generally are tax deductible as “ordinary and necessary” business expenses. (Annual deduction limits may apply.)

Leasing used to be advantageous from a financial reporting standpoint. But new accounting rules that bring leases to the lessee’s balance sheet go into effect in 2020 for calendar-year private companies. So, lease obligations will show up as liabilities, similar to purchased assets that are financed with traditional bank loans.

Leasing also has some potential drawbacks. Over the long run, leasing an asset may cost you more than buying it, and […]

By |March 4th, 2019|business, depreciation, expensing, New Tax Laws|0 Comments

What’s New for 2018 California Tax Returns?

What’s new for 2018 California tax returns? The list of changes is long. That’s why the CA Franchise Tax Board has created a “Taxnews” page, with information about tax filing. The page includes information about credits such as the earned income credit, the new employment credit and the CA Competes credit, plus instructions for many other tax topics.

A few of the highlights include:

Federal Tax Reform

The Tax Cuts and Jobs Act (TCJA) signed into law on December 22, 2017, made changes to the Internal Revenue Code (IRC). In general, California Revenue and Taxation Code does not conform to the changes. California taxpayers continue to follow the IRC as of the specified date of January 1, 2015, with modifications. The IRS issued Notice 2019-11 to provide for a waiver of the estimated tax penalty for taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.

This relief is designed to help taxpayers who were unable to properly adjust their withholding and estimated tax payments to reflect an array of changes under the TCJA, the far-reaching tax reform law enacted in December 2017. For California purposes, the TJCA had no general impact to the […]

California Tax News Related to Wildfires

Tax relief is available for California employers in counties hit by recent wildfires. The CA Employment Development Dept. (EDD) has announced that employers in Butte, Los Angeles and Ventura counties directly affected by the Camp, Hill and Woolsey fires may request up to a 60-day extension of time from the EDD to file their state payroll reports and deposit state payroll taxes without penalty or interest. Written extension requests must be received within 60 days from the original delinquent date of the payment or return.

Due to a presidential disaster declaration, some victims of California’s recent wildfires may qualify for federal Disaster Unemployment Assistance (DUA). DUA provides temporary unemployment assistance to eligible individuals whose work or self-employment has been interrupted due to a major disaster and who also meet certain other conditions. This applies to losses in CA from the Camp, Hill, and Woolsey fires. Eligible persons may receive up to $450 per week for up to 27 weeks. The deadline to file is 12/14/18. If you have any questions, please contact your Linkenheimer CPA. For more info […]

By |November 21st, 2018|CA tax, california, disaster|0 Comments

How to Avoid Getting Hit with Payroll Tax Penalties

For small businesses, managing payroll can be one of the most arduous tasks. Adding to the burden earlier this year was adjusting income tax withholding based on the new tables issued by the IRS. (Those tables account for changes under the Tax Cuts and Jobs Act.) But it’s crucial not only to withhold the appropriate taxes — including both income tax and employment taxes — but also to remit them on time to the federal government.

If you don’t, you, personally, could face harsh penalties. This is true even if your business is an entity that normally shields owners from personal liability, such as a corporation or limited liability company.

The 100% penalty

Employers must withhold federal income and employment taxes (such as Social Security) as well as applicable state and local taxes on wages paid to their employees. The federal taxes must then be remitted to the federal government according to a deposit schedule.

If a business makes payments late, there are escalating penalties. And if it fails to make them, the Trust Fund Recovery Penalty could apply. Under this penalty, also known as the 100% penalty, the IRS can assess the entire unpaid amount against a […]

By |July 9th, 2018|employer, income tax, tax|0 Comments

Choosing the Best Business Entity Structure Post-TCJA

For tax years beginning in 2018 and beyond, the Tax Cuts and Jobs Act (TCJA) created a flat 21% federal income tax rate for C corporations. Under prior law, C corporations were taxed at rates as high as 35%. The TCJA also reduced individual income tax rates, which apply to sole proprietorships and pass-through entities, including partnerships, S corporations, and, typically, limited liability companies (LLCs). The top rate, however, dropped only slightly, from 39.6% to 37%.

On the surface, that may make choosing C corporation structure seem like a no-brainer. But there are many other considerations involved.

Conventional wisdom

Under prior tax law, conventional wisdom was that most small businesses should be set up as sole proprietorships or pass-through entities to avoid the double taxation of C corporations: A C corporation pays entity-level income tax and then shareholders pay tax on dividends — and on capital gains when they sell the stock. For pass-through entities, there’s no federal income tax at the entity level.

By |June 25th, 2018|business, New Tax Laws, tax|0 Comments

New Overtime Rules are Changing on December 1st. Are You Ready?

Earlier this year new overtime rules were published modifying the regulations under the Fair Labor Standards Act (FLSA). The rulings may impact the way your business clients classify and compensate their employees. As many as 4.2 million workers may need to be reclassified as a result of this change, and businesses must be in compliance by December 1, 2016.

What has changed.
The minimum salary requirement for certain employees to be considered exempt from the FLSA’s overtime requirements will increase from $23,660 to $47,476 annually (or from $455 to $913 weekly).

If you or your clients have exempt employees earning less than $47,476 per year, you may need to increase their salary or reclassify them as non-exempt and pay them overtime when due. If you have any questions, please contact your Linkenheimer LLP CPA.

By |October 3rd, 2016|federal, law|0 Comments

Federal Open Market Committee Update

The Federal Open Market Committee left its targeted Federal Funds rate unchanged, and the stance of monetary policy remained accommodative.  While acknowledging that the case for an increase has strengthened, citing the solid labor market and improving pace of economic activity, the committee nonetheless decided to wait for further evidence of continued economic expansion.  The statement also noted that business investment remains soft and inflation is still below target.  However, 3 members did vote for a rate increase,  the largest number since the initial tightening last year. The language is being viewed as a signal that a rate hike in 2016 is still very much on the table.

Rates and Market:

  • Federal Funds Target: ¼ to ½ percent
  • Policy Bias: Remains accommodative
  • Market Reaction: Bond yields initially jumped slightly only to retrace 1-2bp below pre-announcement levels.

The FOMC announced the following actions and analysis:

  • 7 to 3 vote
  • Economic activity accelerating from sluggish pace earlier in the year
  • Labor and consumer spending is strong, business investment is still weak
  • Inflation is soft and expected to remain so
  • The case for tightening has strengthened, but more evidence is required

The Statement:

Information received since the Federal Open Market Committee met in July indicates that the labor market has […]

By |September 27th, 2016|Uncategorized|0 Comments