4Thought Blog

Congress has passed the Inflation Reduction Act (IRA) and President Biden is expected to sign it into law.

The $740 billion bill contains many tax breaks and raises revenue through a new minimum tax on large, profitable corporations and an excise tax on stock buybacks. It's intended to reduce the U.S. deficit by about $300 billion. Other revenue would come from stricter enforcement of tax compliance by the IRS.

Here are some highlights of the bill.

One of the advantages of owning and operating your own business is the ability to hire family members to fill open positions.

This can be a significant perk in today's tight labor market. Bringing on family members can have tax benefits for all involved, too, and offers an opportunity to start a retirement savings account for your children.

The potential benefits vary based on such factors as the familial relationship, your children's ages and the type of entity you chose for your business. Here's what you need to know.

Pennsylvania’s new budget for 2022-23 includes several business tax changes, including lower taxes for corporations.

The new budget cuts the corporate net income tax from 9.99% to 8.99% as of Jan. 1, 2023, and then gradually reduces (0.5%) it each year in phases until 2031, when it reaches 4.99%.

Pennsylvania’s corporate net income tax rate is currently the second highest in the nation, behind only New Jersey at 11.5%, according to the Tax Foundation. The 2031 rate will make Pennsylvania’s corporate net income tax the sixth lowest, according to the Pennsylvania Chamber of Business and Industry (PCBI).

Other business tax changes that start Jan. 1 include:

The IRS recently announced it will be increasing the standard mileage rate for qualified business drivers for the second half of 2022.

The adjustment reflects rising costs at the gas pumps this year. It's accompanied by a hike in the standard mileage rate for medical expenses for all taxpayers and moving expenses for active-duty military personnel.

Noncompete agreements are commonly included in business purchase transactions to prevent the seller from competing against the buyer for the term of the noncompete agreement. These arrangements are also sometimes called covenants-not-to-compete or noncompete covenants.

Important: Laws regarding noncompete agreements vary from state to state. For example, courts in California generally reject noncompete agreements because state law makes them unenforceable except in limited circumstances. Because noncompete covenants are generally not allowed in the state, California employers often use confidentiality agreements and other types of contracts to protect trade secrets and other information. Still, in many jurisdictions, noncompete covenants can be enforceable if certain conditions are met.

Noncompete agreements have important tax implications. Here are the details.

With business travel picking up again and summer fast approaching, many business owners may be mulling trips that combine work with vacation or other personal activities.

A quick refresher on the IRS rules related to deducting business vs. personal travel costs can help you reduce your tax bill next year.

In general, the value of statutory fringe benefits paid to employees is exempt from federal income tax. But special rules apply to S corporation shareholders who own 2% or more of a company.

For these owner-employees, several fringe benefits are tax-exempt, but others — including some of the biggest benefits — constitute taxable income. Here's a brief rundown of the tax treatment of fringe benefits for individuals who own 2% or more of an S corporation.

When it comes to selling your business, you must consider the buyer's perspective — not just your own — to get the deal done.

Both sides will require certain due diligence procedures, which take time and patience to get through. Here's what to expect, including some tax considerations.

If you own a small or medium-sized business, it may be eligible for some significant tax breaks that aren't available for larger entities.

Here are three examples to consider as you file your tax return for 2021 and plan for 2022.

There are new tax filing requirements for many pass-through businesses for this tax season.

For tax years beginning in 2021, S corporations and partnerships must file Schedule K-2 and Schedule K-3 if the business has relevant international tax items.

The new schedules are intended to provide more transparency and clarity for the owners of pass-through businesses regarding how to calculate their U.S. income tax liability from relevant international items. The IRS designed these specific schedules to replace the current Schedule K-1 reporting for these items so that the information provided to owners is delivered in a standard format with an additional level of detail.