Business Website Costs: How to Handle Them for Tax Purposes
The business use of websites is widespread. But determining the proper tax treatment for the costs involved in developing a website can be difficult. The IRS hasn’t yet released formal guidance on when website costs can be deducted, so you must apply existing guidance that’s available on other costs to the issue of website development costs. The exact treatment of website design costs depends on whether they’re software or hardware and whether they’re part of a start-up business. If you hire third parties to set up and run your website, payments are currently deductible as ordinary and necessary business expenses.
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2020 Q4 Tax Calendar: Key Deadlines for Businesses and Other Employers
Here are a few key tax-related deadlines for businesses and other employers during Quarter 4 of 2020. OCT. 15: If you’re the owner or operator of a calendar-year C corp. which filed an extension, file a 2019 income tax return. NOV. 2: Report income tax withholding and FICA taxes for Q3 2020 (unless you’re eligible for a Nov. 10 deadline because you deposited on time (and in full) all of the associated taxes due). DEC. 15: If a calendar-year C corp., pay the fourth installment of 2020 estimated income taxes.
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Employers Have Questions and Concerns About Deferring Employees’ Social Security Taxes
The IRS has issued guidance to employers about the presidential action to allow employers to defer certain payroll taxes. Notice 2020-65 was issued to implement President Trump’s executive memo signed Aug. 8. The deferral involves wages or compensation paid to an employee beginning Sept. 1, 2020, and ending Dec. 31, 2020, but only if the amount paid for a biweekly pay period is less than $4,000, or an equivalent amount in other pay periods. The guidance postpones the withholding and remittance of the employee share of Social Security tax until the period beginning Jan. 1, 2021, and ending April 30, 2021. Penalties, interest and additions to tax will begin to accrue on May 1, 2021.
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5 Key Points About Bonus Depreciation
You’re probably aware of the 100% bonus depreciation tax break that’s available for a wide variety of qualifying property. There are some important points to be aware of when it comes to this powerful tax-saving tool. For example, bonus depreciation is available for new and most used property. And it’s scheduled to phase out. Under current law, 100% bonus depreciation will generally be phased out in steps. An 80% rate will apply to property placed in service in 2023, 60% in 2024, 40% in 2025, and 20% in 2026, and a 0% rate will apply in 2027 and later years. Asset depreciation can be a complex area of tax law.
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CARES Act Made Changes to Excess Business Losses
The CARES Act made changes to excess business losses that affect those who hold an interest in a business (or may do so in the future). This includes changes that are retroactive and there may be opportunities to file amended tax returns. The CARES Act made several retroactive corrections to the excess business loss rules as they were originally stated in the 2017 Tax Cuts and Jobs Act. Most importantly, the law clarified that deductions, gross income or gain attributable to employment aren’t taken into account in calculating an excess business loss. This means that excess business losses can’t shelter either net taxable investment income or net taxable employment income.
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The President’s Action to Defer Payroll Taxes: What Does it Mean for Your Business?
President Trump has signed a Presidential Memorandum to defer the employee portion of Social Security taxes for some people. The action only defers the taxes, which means they must be paid in the future. However, the action directs the U.S. Treasury Secretary to explore ways to eliminate the obligation to pay the taxes deferred. Employers have questions and concerns.
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The Possible Tax Consequences of PPP Loans
If your business got a Paycheck Protection Program (PPP) loan taken out due to the COVID-19 crisis, there are potential tax implications. The PPP allows eligible businesses to receive loans that will be forgiven if they spend the proceeds on certain items within a certain period of time. In general, the reduction or cancellation of non-PPP debt results in cancellation of debt (COD) income to the debtor. However, forgiveness of PPP debt is excluded from gross income. The IRS has stated that expenses paid with PPP proceeds can’t be deducted, because the loans are forgiven without having taxable COD income and are tax-exempt income. Deducting the expenses would result in a double tax benefit.
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File Cash Transaction Reports for Your Business — on Paper or Electronically
Does your business receive large amounts of cash or cash equivalents such as bank checks? You may be required to submit forms to the IRS to report these transactions. Each person engaged in a trade or business who receives more than $10,000 in cash in one transaction, or in two or more related transactions, must file Form 8300. Any transactions conducted in a 24-hour period are considered related transactions. Businesses required to file Form 8300 should know that in addition to filing on paper, e-filing is an option. The form is due 15 days after a transaction. Businesses that file electronically get an automatic acknowledgment of receipt when they file.
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Business meal deductions: The current rules amid proposed changes
President Trump has proposed increasing the amount that can be deducted for business meal and entertainment expenses. While it’s unclear if a law could pass that would enhance tax breaks, it’s a good time to review the current rules.
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IRS releases 2021 amounts for Health Savings Accounts
There are many advantages to Health Savings Accounts (HSAs). Here are a few of them, along with the HSA inflation-adjusted amounts for the 2021 calendar year.
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Fortunate enough to get a PPP loan? Forgiven expenses aren’t deductible
If you get a PPP loan and use the proceeds on certain expenses, the loan amount will be forgiven. Can you then deduct the expenses on your tax return? The IRS answers that question in the new guidance.
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Business charitable contribution rules have changed under the CARES Act
Food and financial insecurity have increased during the coronavirus (COVID-19) pandemic. If your business is donating to charity to help ease the pain, you may be eligible for enhanced charitable donation deductions.
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Hiring independent contractors? Make sure they’re properly classified
As a result of the coronavirus (COVID-19) crisis, your business may be using independent contractors to keep costs low. But be careful that these workers are properly classified for federal tax purposes. If the IRS reclassifies them as employees, it can be costly. The question of whether a worker is an independent contractor or an employee is a complex one. The IRS and courts have generally ruled that individuals are employees if the businesses they work for have the right to control and direct them in their jobs. Otherwise, they’re generally contractors. Contact us if you’d like to discuss how the rules apply to your business. We can help ensure that none of your workers are misclassified.
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Coronavirus (COVID-19): Tax relief for small businesses
In response to the coronavirus (COVID-19), Congress and the IRS have recently provided tax relief to businesses. Here’s a brief rundown.
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CARES Act will provide billions of dollars of relief to individuals & businesses.
After extensive negotiations between the U.S. House of Representatives, the U.S. Senate and the White House, an agreement has been reached on a massive stimulus bill to address the financial and health care crisis .
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The IRS announces that income tax payments due April 15 can be deferred to July 15
The IRS and the U.S. Treasury Department have been making a series of announcements to provide tax relief in the wake of the coronavirus (COVID-19) pandemic.
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Work Opportunity Tax Credit extended through 2020
The Work Opportunity Tax credit was set to expire on Dec. 31, 2019. But a law passed late last year extends it through Dec. 31, 2020. Here’s how employers can benefit.
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