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...

Many of you are asking where we stand on tax reform for next year and how will it affect your taxes.   Here is what we know right now… 2017 Tax Reform: Key differences between the Senate and House tax bills The Senate and the House have each passed their own version of the “Tax Cuts and Jobs Act.” The two versions of the bill have many similar provisions, but they also have a number of key differences that will have to be reconciled by the Conference Committee as the two bills are merged into a single piece of legislation. It is unclear at this point how these differences will be resolved.  There is a general inclination that the Senate's provisions carry slightly more weight since the Senate is subject to budgetary restraints as part of the reconciliation process and there is less flexibility to make changes to their bill. The House voted on December 4 to go to conference with the Senate to reconcile the two bills and the Senate is expected to name conferees...

One tax break often overlooked is the Work Opportunity Tax Credit (WOTC).  The WOTC has been around for years but many businesses are not aware of it.  It is a program that allows employers who hire individuals from certain targeted groups (see list below) to receive a federal income tax credit.  Industries such as construction, restaurants, transportation, health care, c-stores, manufacturing, distributors, call centers, and staffing agencies tend to see the most qualifying employees for this credit. How much is the credit worth? It ranges from $2,400 to $9,600 per new hire and there is no limit on the number of new hires or total amount of credits you can claim. That's like free money from the government!  Sadly, millions of dollars in tax credits go unclaimed each year even though employers are hiring workers every day from the WOTC targeted groups.       Why you have to act fast? One reason the credit is overlooked is...

This time of year we get lots of questions about giving gifts to employees.   Are employee gifts taxable to the employee?  What about gift cards or certificates? The answer depends on the type of bonus or gift that you give.  Each have varying tax consequences.  Let's take a look at some of the most popular ones and their tax treatment. Cash Bonus Giving a cash bonus to employees during the holidays, or anytime throughout the year, is treated as taxable  income to the employee regardless of the amount.   The amount of the bonus will be subject to payroll and income taxes as if they were normal wages.    Non-cash Gifts A small property gift given to an employee will most likely be excludable from income as a de minimis fringe benefit.  The term  de minimis  is generally used to describe something that is too small or insignificant to be considered, something unimportant.  It actually comes from a La...

If you can afford health insurance but choose not to buy it, you must pay a fee called the individual shared responsibility payment.  You might also see it referred to as the "penalty," "fine," or "individual mandate." But you may be wondering, "Which costs less, health insurance or the penalty?" That is a good question since the decision of whether you will purchase health insurance for 2016 needs to be made NOW.   If you want coverage to begin January 1, 2016 your last day to sign up is December 15th.   Also, many people are under the false impression that the tax penalty is only $95 and that it's cheaper to pay the penalty rather than purchase health insurance.     So what is the tax penalty for not having insurance in 2016?  Let's find out. As the table above shows, you will pay… Either a fixed fee  OR   a percentage of your income, whichever is  greater . The fixed fee penalty usually hits low income families...