A report that tech behemoth Amazon is unlikely to pay federal income tax for 2018 recently set off a firestorm. How could a company with record U.S. profits for the year avoid paying up while most Americans can’t?
On the last page of a nine-page tax plan that calls for slashing business rates, President Donald Trump and congressional Republicans proposed a little-noticed, brand-new tax that may hit companies like Apple Inc. and Pfizer Inc.
President Donald Trump and Republican leaders launched an urgent effort to get a major legislative win this year, announcing a long-awaited tax plan that will immediately set off a fight over how much top earners should pay.
Many retailers and health insurers have higher effective corporate tax rates than tech and pharmaceutical firms. Is that fair?
Columnist Craig Smalley, EA, looks at tactics C corporations can use to reduce taxes in 2016 and explains the tax advantages of combining a C corporation with an S corporation.
A Treasury Department plan to limit companies that avoid taxes by moving profits offshore is written in a way that would ensnare common intercompany, say businesses.
California’s Franchise Tax Board is extending the hours of its call center and several field offices because technical difficulties blocked many callers from getting through Monday.
McGladrey’s Jeffrey Collins discusses which companies should consider switching from corporations to LLCs to avoid franchise taxes.
The IRS says about three in four Americans receive refunds each year and the average refund amount is around $2,900. That's a lot of money that you can spend, save or invest. SPEND IT WISELY If you're going to spend it, then spend it wisely. You can start by paying down expensive debt, such as credit card debt. Financial advisers universally rank getting rid of credit card debt as one of the best ways to spend your tax refund. You could alternately spend it on any kind of maintenance project—on your home or auto repairs—that would otherwise cost you even more money down the line if you put the expense on a credit card or had to dig into savings.
Chances are, the first paycheck you ever received came as a shock. It was almost certainly less than you expected. The reason for the discrepancy? Taxes. If you are an employee, your employer withholds income tax from your pay. Your pay includes not only your regular pay but other compensation such as bonuses, commissions, and vacation pay. The amount of income tax your employer withholds from your regular pay depends on the amount you earn and other information you give your employer on federal form W-4.
While policymakers obsess about the income tax, they often lose sight of an important detail: For two-thirds of households, the levy that matters most is the payroll tax. According to a new report by the Joint Committee on Taxation, the 80 million tax filers making $40,000 or less will collectively pay no federal income tax and many will even receive cash payments from the IRS in 2015. But they will pay $121 billion in Social Security and Medicare payroll taxes (including the employer share, which most economists believe falls on workers).
Understanding the Social Security tax and the Medicare tax is critical for payroll accounting. In this section we discuss the employers' portion of the Social Security tax. In addition to the amount withheld from its employees for Social Security taxes, the employer must contribute/remit an additional amount, which is an expense for the employer. In the year 2015, the employer's portion of the Social Security tax is 6.2% of the first $118,500 of an employee's annual wages and salary. For example, if an employee earns $40,000 of wages, the entire $40,000 is subject to the Social Security tax. This means that in addition to the withholding of $2,480, the employer must also pay $2,480.
Generally, employers report payroll by calculating gross monthly wage earning and then various payroll deductions to arrive at net pay. While this seems simple enough to understand, calculating various payroll deductions requires that the payroll accountant be detail oriented and work with extreme accuracy.
Closely-held corporations and their owners can seem inseparable. But this fluidity stops at Payroll’s door—in other words, when income tax withholding begins. The IRS recently issued a document called an Action on Decision (AOD) in which it said that it won’t follow a Tax Court decision that required it to honor a company’s designation of its delinquent payroll taxes as payment for a specific employee’s delinquent income taxes. Impact: An AOD means that the IRS will accept the court’s decision, but it won’t be bound by it in future cases, and it will look for and continue to assert its position in similar cases. (AOD 2014-01, IRB 2014-48)
America’s multinational corporations are growing grudgingly resigned to paying U.S. taxes on $2 trillion in profits they have stashed abroad. “I think there is a recognition that part of any tax reform will be a taxation on the money that’s overseas,” said Mark Weinberger, the CEO of EY, one of the world’s largest professional services companies. Weinberger serves as tax committee chairman of the Business Roundtable, which represents chief executives of some of the country’s biggest companies, including several in Minnesota. He briefed reporters last week on business tax reform. Weinberger said the roundtable has not taken a position on White House and congressional proposals to tax once-sheltered foreign profits of U.S. corporations.
Legislators, corporate lobbyists and President Barack Obama have been at odds for years over how to handle the taxation of foreign profits by U.S. multinational corporations. The U.S. is one of the few countries that uses a worldwide system to tax corporate profits made abroad. Companies are required to pay a "repatriation tax" if foreign profits are moved stateside. Many corporations and Republican congressmen support a move to a territorial system under which foreign subsidiaries' repatriated profits would be exempt from such a tax. The president, who has proposed a one-time, 14% tax on the approximately $2 trillion in profits accumulated abroad by U.S. multinational firms, supports taxing foreign profits independent of a corporation's decision to repatriate them.
When Gov. Jerry Brown signed into law last September a dramatic expansion of the state’s film and TV tax credit program, it was in many ways just the start of the new effort to lure production back to California. On Thursday, the California Film Commission unanimously passed draft regulations that will govern how the $330 million in annual tax credits will be disbursed. The regulations now go to the state Office of Administrative Law for final approval, so there still could be changes. The legislation more than tripled the amount of tax credits available to movie and TV projects, as well as expanded eligibility to include big-budget feature films, one-hour drama series and TV pilots. But perhaps the biggest change was in the way applicants will be awarded credits.
Yesterday, February 2, 2015, the Finance and Tax Committee of the Florida Senate vote 6 – 0 to move forward to increase the amount of income corporations can exempt for their state income taxes in SB 138. The bill would also increase the amount of income that is exempt from the franchise tax that is imposed on banks and savings associations. SB 138 has an identical bill in the Florida House as H 0049 and is moving just as quickly as in the Florida Senate. The bill was introduced by Republican Senator Dorothy Hukill of District 8. Under current Florida law, corporations can exempt $50,000 of their net income from the Florida Corporate Income Tax. Under SB 138, that number will be increased to $75,000 corporations can exempt.
As an entrepreneur, the best gift you give yourself this holiday season may not have been under the tree. In fact, most of us will have spent more time decorating for the holidays than we will allocate to tax planning during the Christmas season, yet taxes are the biggest expense most small companies face. So as a final present, here are some words of advice on year-end tax planning that I’ve gathered with the help of Aaron Young, CEO of corporate solutions service and education provider Laughlin Associates, of Reno, Nevada. I met Young several weeks ago as he presented at the December CEO Space business growth conference in Las Vegas. As disclosure, I have been invited to join the faculty team of CEO Space as a future coach and presenter.
Should you choose an LLC or S-Corp for your business? Learn about the pros and cons of each.