Operating your small business as a Qualified Small Business Corporation (QSBC) could be a tax-wise idea.
How To Get an “Early” Refund, Adjust Your Withholding
If you received a large refund this year, you may want to adjust your withholding. Each year, millions of taxpayers claim an income tax refund. To be sure, receiving a payment from the IRS for a few thousand dollars can be a pleasant influx of cash. But it means you were essentially giving the government an interest-free loan for close to a year, which isn’t the best use of your money.
3 Ways Your Business Can Uncover Cost Cuts
Every business wants to cut costs, but it isn’t easy. We’re talking about clear and substantial ways to lower expenses, thereby strengthening cash flow and giving you a better shot at strong profitability.
Obvious places to slash costs (such as wages, benefits and overhead) often aren’t viable options because the very stability of your operation may depend on them. But there might be other ways to lower expenses if you dig deeply enough. Here are three possibilities.
Empower Your Sellers With Sales Enablement
Sales are the driving revenue force of just about every business. But all too often, once a sales team is up and running, it’s left to its own devices to maintain its strengths, develop new skills, and upgrade its technology. This can produce mixed results—some sales departments are remarkably self-sufficient, while others could really use more organizational support.
Maximize the QBI Deduction Before It’s Gone
The qualified business income (QBI) deduction is available to eligible businesses through 2025. After that, it’s scheduled to disappear. So if you’re eligible, you want to make the most of the deduction while it’s still on the books because it can potentially be a big tax saver.
4 Ways C Corporations Ensure “Reasonable” Compensation
If you own a C corporation, you know there’s a tax advantage to taking money out as compensation rather than as dividends. The reason: A corporation can deduct the salaries and bonuses that it pays executives, but it can’t deduct dividend payments. Therefore, if funds are paid as dividends, they’re taxed twice, once to the corporation and once to the recipient. Money paid out as compensation is taxed only once to the recipient employee.
A Strategy to Raise Your Medical Expense Deduction
With a bit of planning, you may be able to boost your itemized medical expense deduction when you file your 2024 tax return next year. Only eligible expenses exceeding 7.5% of your adjusted gross income are deductible.
It’s not an easy hurdle to clear short of a major medical disaster, which, of course, you want to avoid. But you can use a strategy called “bunching” medical expenses to exceed the 7.5% threshold.
Have You Recently Reviewed Your Life Insurance Needs?
At one time, life insurance played a much more significant part in an estate plan than it does now. Why? Families would often use life insurance payouts to pay estate taxes. But with the federal gift and estate tax exemption at $13.61 million for 2024, far fewer families currently are affected by the estate tax.
Deductions vs. Credits: What’s the Difference?
One of the most common misunderstandings about filing an income tax return is the difference between deductions and credits. Deductions reduce the amount of a taxpayer’s income before tax is calculated. For example, on your individual return, you can either take the standard deduction or itemize deductions if it will reduce your taxable income more. Credits, on the other hand, reduce the actual tax due, dollar-for-dollar, generally making them more valuable than deductions.
Section 179 Expensing and Bonus Depreciation Pitfalls
If eligible, you can elect to use Section 179 expensing or bonus depreciation to deduct a large portion of the cost (and, in some cases, the full cost) of eligible property in the year it’s placed in service. Alternatively, you may follow regular depreciation rules and spread deductions over several years or decades, depending on how the asset is classified under the tax code.