4Thought Blog

The Biden Administration recently released detailed tax proposals through the so-called Green Book. If approved, there would be big changes for high-income earners, on capital gains and for some business taxes.

While these proposals would all have to go through the legislative process and therefore may not pass or may be changed, it’s possible some of these may become law and therefore warrant tax planning considerations.

Even if Biden’s proposals don’t become law, there are some automatic taxes changes coming down the road as tax changes in President Trump’s Tax Cuts and Jobs Act only run through 2026. While five years feels like a long time, it’s not when it comes to tax planning.

Here’s what the Biden administration has proposed:

The IRS has announced its agents will be conducting unannounced in-person meetings with delinquent business and individual taxpayers.

The IRS routinely conducts these face-to-face visits, it said in an announcement last month. The primary purpose of these visits is to make contact with taxpayers with a previously known tax issue that wasn’t resolved through mail contact, the agency said.

These meetings are scheduled in areas with a limited number of available revenue officers due to declining IRS resources. The first face-to-face contact from a revenue officer is almost always unannounced.

Concannon Miller Shareholder Tony Deutsch recently responded to an Ask a CPA submission from the Pennsylvania Institute of Certified Public Accountants. Check out the question and his response below.

Question: I am trying to get caught up by filing back taxes for the past four years. During that time, the only income I had was from student grants and loans (no scholarships). I have 1098-T forms for each of those years, but nothing else. What tax forms should I use, and how do I fill them out?

The federal, state and economic environment is in a state of constant change.

The end of 2017 was the Tax Cuts Jobs Act – the biggest federal tax change in 30 years. Last year’s Wayfair v. South Dakota sales tax case now requires out-of-state sellers of goods and services to collect sales tax if they have no physical presence. We also saw the North American Free Trade Agreement renegotiated and new tariffs imposed on imported products.  

While we always advise tax and business planning be done annually, these changes make it more crucial than ever. Here are 10 business and tax planning tips to boost your business.

The R&D or Research and Development Tax Credit is available to far more industries than you’d think, including manufacturing, construction and software development among many others. You don’t have to develop a new product to qualify; even improving processes can be a qualifying activity. The R&D Tax Credit is one of the most lucrative available as it’s a dollar-for-dollar reduction in tax liability.

The recent federal tax reform measures included a new deduction offering possibly the greatest tax benefit to pass-through businesses in more than 60 years.

The Qualified Business Income Deduction – or QBI – allows qualified small business owners to simply not pay income taxes on 20% of their income in tax years 2018 through 2026.

Like many provisions in the federal tax code, there are of course stipulations. Restrictions kick in to reduce the benefit when a taxpayer’s income rises and there are a different set of qualifications for Specified Service Trades or Businesses (SSTB).

Late this summer, the IRS released new proposed regulations intended to clear up some of the QBI deduction rules. These regulations provided guidance how owners of multiple businesses can use aggregation to affect their deduction and the definition of SSTBs, which face deduction limitations.

Federal tax reform through the 2017 Tax Cuts and Jobs Act (TCJA) provided some of the most significant tax-saving opportunities for businesses in more than 30 years.

While the lower 21% tax rate for C Corporations garnered much of the attention, small businesses also received some advantageous new benefits. The challenge is that some of the new small business benefits are fairly complex.

This is especially true for the 20% Qualified Business Income (QBI) Deduction. It offers the greatest tax benefit to small businesses in more than 60 years, but obtaining the maximum deduction involves some sophisticated calculations and planning.

While tax planning is always valuable, it’s even more important for 2018. The TCJA contains significant changes that provide substantial tax savings, and also reduced deductions that will increase a business owners’ tax liability.

Federal tax reform through the Tax Cuts and Jobs Act included a multitude of new tax benefits for businesses, including one for employers who offer paid family and medical leave.

The new Employer Credit for Paid Family and Medical Leave includes several caveats, including that it’s only available from Jan. 1, 2018 through Dec. 31, 2019. Despite the limited two-year window, the credit may be worth exploring for companies that offer paid FMLA leave.

Since most businesses are pass-through entities, combining business and individual tax planning is essential. If your CPA doesn’t look at your entire financial picture, you’ll likely miss out on tax-saving opportunities. Early tax planning provides for far more tax options.

No matter the type of business you own, the new federal tax reform act offers benefits – many of them significant.

Much has been made about the major tax rate reduction for C Corporations. It’s without a doubt a big tax break for C Corps, but it’s far from the only substantial benefit for businesses.

For small businesses – specifically pass-through entities – the new 20% Qualified Business Income Deduction (QBI) is likely one of the biggest tax benefit in more than 60 years. Read on to learn more about QBI and several other new or changed business deduction provisions under the 2017 Tax Cuts and Jobs Act: