Theresa Arndt, CPA

We have just seen the biggest tax overhaul in 30 years.   The final version rewrites the tax code in dozens of ways, eliminating deductions, changing rates, and creating brand new benefits for certain taxpayers, such as business owners.  With 479 pages of brand new tax law how can you know how the tax bill will affect you and your family? How exactly would these changes affect me? It depends on where you live, what you do and how big your family is. You're more likely to get a tax increase if you live in a high-tax state or lean heavily on deductions—such as unreimbursed employee expenses—that will be eliminated under the bill.  To see how Americans fare across different incomes and circumstances, Bloomberg turned to Tim Steffen, director of advanced planning at Baird Private Wealth Management. His eight scenarios examine only 2018 wage and pass through income from an S corp or partnership that you own and how taxes owed on those earnings wou...

During the holiday season many business owners give gifts to their clients, prospective clients or employees to thank them for their business or show appreciation for their hard work.      But did you know your deduction for that business gift is limited to $25?   The basic rule is that if you give someone a gift for business purposes, your business expense deduction is limited to $25 per person per year.   Any amount over the $25 limit is not deductible.   If this amount seems low, it is.   That’s because it was established in 1954.      Most taxpayers are at least vaguely aware of this tax rule.   But what isn’t as widely known is that there are a few exceptions and work-arounds to this rather restrictive limit.      Here’s a quick rundown of the major exceptions to the $25 limit.   Companywide gifts   The $25 limit applies only to gifts to individuals, either directly or ind...

With the fiscal cliff stealing the spotlight over the holidays, very little attention was given to two new taxes that started January 1.   Thanks to the Affordable Care Act (also known as Obamacare) the first wave of tax increases rolls out in 2013 to help fund the massive 2010 health care reform.   The new taxes on wages and investment income are expected to raise about $318 billion over 10 years.   Granted the bulk of these taxes fall mainly on the wealthy and the health care industry, but sooner or later we will all be paying more.   To find out who pays and how much, keep reading: Increased Medicare payroll tax Currently, the Medicare payroll tax is 2.9% and it applies to earned income only.   An employee is responsible for 1.45% of the tax and it’s deducted automatically from the paycheck.   The employer kicks in the other 1.45%.     Under the new tax provision, most taxpayers will continue to pay the 1.45% Me...

It’s almost January, and that means Form 1099 season. Companies big and small are about to start churning them out and you can’t afford to ignore them. If you’re in business, that is you file a Schedule C, E, F, Form 1065, Form 1120 or Form 1120S, you need to pay attention to issuing them or face penalties .   New in 2011 to all federal business tax returns was a box asking whether any payments were made during the year that would require Form 1099 to be filed and a box asking whether or not you filed all required Forms 1099.    By asking the two questions prominently on the return, the IRS isn't only reminding taxpayers of their obligations but also setting a snare for taxpayers that habitually violate the law. If a taxpayer answers "no" and an audit shows he should have sent the forms, the answers could be evidence in favor of higher penalties.   So what are my Form 1099 obligations?   You need to send a Form 1099 to all service provider...