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The $1.4 trillion spending package enacted on December 20, 2019, included the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which had overwhelmingly passed the House of Representatives in the spring of 2019, but then subsequently stalled in the Senate. The SECURE Act represents the most sweeping set of changes to retirement legislation in...
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A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. Most tax credits are nonrefundable: If the credit amount exceeds the tax owed, no refund is given. Refundable credits are different: If...
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As the end of the year is fast approaching, we should consider any last-minute strategies that might help reduce your 2019 tax bill. Last year was the first year to be impacted by the Tax Cuts and Jobs Act of 2017 (TCJA). While there was no significant new legislation in 2019 affecting individual taxes, situations...
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As the year draws to a close, it’s time for us to discuss whether there are any last-minute actions we can take to reduce your business-related 2019 tax liability. The actions necessary will depend on the year-end estimate of your business taxable income. Section 179 Expensing and Bonus Depreciation Two of the biggest tax incentives...
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UPDATE 12/28/19: For a detailed walkthrough and instructions for completing the new W-4 for 2020, please read this article. In response to the shock of some taxpayers who are still reeling from the amount due with their 2018 tax returns, the IRS has published a draft of the updated Form W-4, which is used to...
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Health savings accounts (HSAs) are used in conjunction with high deductible health plans and offer five tax advantages compared to traditional savings accounts: Your own contributions to the HSA are tax-deductible in the current year. Employer contributions to the HSA are excluded from income. Earnings inside the HSA (i.e. interest, dividends, and capital gains) are...
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What is tax conformity? Tax conformity is a state’s adoption of the federal definitions of income, as contained in the Internal Revenue Code (IRC). For individuals, it’s the calculation of federal adjusted gross income; for businesses, it’s federal taxable income. Traditionally, Virginia adopts those definitions as of a fixed date — usually, but not always,...
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Parents who own businesses have a few tax incentives for hiring their children to work in their business: Shifting income to a lower (or 0%) tax bracket: If you hire your child to work in the business, any wages paid to him/her will be deductible by the business. Suppose that your combined federal and state...
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Note: This piece was originally meant to be included in my Year-end business Tax Planning post, but I broke it out separately due to the length and complexity of the subject. One of the biggest changes for 2018 is the new qualified business income deduction. If you are a sole proprietor, a partner in a...
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