S corporation shareholders have an added reason to worry about their company's annual performance: It has a direct impact on their own income taxes. How It Works Unlike a regular C corporation, an S corporation usually doesn't pay federal income taxes itself. Instead, each shareholder is allocated a portion of the corporate income, loss, deductions, and credits on a special "K-1" tax form. The shareholder then must report the items listed on the K-1 on his or her personal tax return. The … [Read more...] about What’s Taxable to an S Corporation Shareholder?
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Hiring An Independent Contractor? Your Tax Obligations
Here’s what you need to know about taxes Two months ago in this column, we explained the differences between employees and independent contractors. The IRS has strict rules that you must follow when you make this distinction because there are very different tax rules for each type of worker. If you’re hiring an independent contractor for the first time, here’s the good news: Your income tax obligations are much simpler than they’d be if you were bringing on a new employee. You are not … [Read more...] about Hiring An Independent Contractor? Your Tax Obligations
Business Start-Up Costs — What’s Deductible?
Launching a new business takes hard work -- and money. Costs for market surveys, travel to line up potential distributors and suppliers, advertising, hiring employees, training, and other expenses incurred before a business is officially launched can add up to a substantial amount. The tax law places certain limitations on tax deductions for start-up expenses. No deduction is available until the business becomes active. Up to $5,000 of accumulated start-up expenses may be deducted in … [Read more...] about Business Start-Up Costs — What’s Deductible?
How Your Choice of Business Entity Benefits Your Bottom Line
Some small businesses develop gradually, transforming from a part-time hobby to a full-time operation. Others go from zero to a hundred in just a few weeks, as entrepreneurs turn ideas into profitable enterprises, seemingly overnight. In either case, it’s easy to overlook certain details, such as how the business is structured. After all, there are more pressing concerns in bringing a product or service to market. Certainly, it is possible to run a business without making a deliberate decision … [Read more...] about How Your Choice of Business Entity Benefits Your Bottom Line
Your Map Through the Tax Maze
Getting through the twists and turns of the tax maze can be a challenge. It gets even more complicated when your goal is to minimize the amount you pay. Fortunately, with a little planning, you can bring your bill down, so that you can put more of your money to work building wealth. Certified Tax Coaches (CTC) offers these tips for making tax time less painful. Assemble Your Team No matter how financially-savvy you are, there are significant benefits to building a team of expert guides to help … [Read more...] about Your Map Through the Tax Maze
Advanced W-4 Tax Planning Methods
Withholding taxes are very important to the federal government. Payroll taxes account for over a third of all federal revenue. These taxes are even more important to American families. Many families do not prepay estimated taxes. Since they only pay withholding taxes, a good W-4 withholding plan is essential. Otherwise, a family could have a very big tax refund or a very big tax bill in the spring. Typically, it’s a good idea to avoid either outcome and work toward tax balance (no refund and no … [Read more...] about Advanced W-4 Tax Planning Methods