The Trust Fund Recovery Penalty

Employers that withhold taxes from employee wages but don’t pay them over to the IRS may face a penalty of 100% of the unpaid tax. The Trust Fund Recovery Penalty (TFRP) can be assessed personally against “responsible” parties. In one case, the owner of three masonry companies was assessed a TFRP of $650,000 for failing […]

Corporate tax rate outlook

Among the tax changes proposed by President-Elect Donald Trump is a revamping of the corporate income tax rate. The rate is currently 21%, which was intended to be permanent under the Tax Cuts and Jobs Act. However, Trump is proposing to drop it to 20% or 15% to stimulate economic growth. To encourage domestic production, […]

How to report contingent liabilities in your company’s financial statements

It’s critical for business owners and managers to understand how to present contingent liabilities accurately in the financial statements. Under U.S. Generally Accepted Accounting Principles (GAAP), some contingent losses may be reported on the balance sheet and income statement, while others are only disclosed in the footnotes. Here’s an overview of the rules for properly […]

Changes to Puerto Rico benefits explored

Back in 2012, Puerto Rico enacted a law (Act 22) to attract wealthy mainland individuals to invest in its communities. In exchange, Puerto Rico and a U.S. tax code provision provide certain tax benefits to Americans who buy homes there. However, the law has driven up local housing prices and reduced tax income. In response, […]

Will the tariff proposals be implemented?

One tax-related proposal of President-Elect Trump is to increase tariffs on foreign imports. On the campaign trail, he said he would impose a 10% to 20% tariff on most imported goods, a 60%-or-more tariff on Chinese products and a 100% tariff on vehicles from Mexico. His position is that tariffs would boost U.S. manufacturing and […]

Maximize your year-end giving with gifts that offer tax benefits

As the end of the year approaches, many people start to think about their finances and tax strategies. One effective way to reduce potential estate taxes and show generosity to loved ones is by giving cash gifts before December 31. Under tax law, you can gift a certain amount each year without incurring gift taxes or […]

Is it ordinary and necessary?

Business owners can generally deduct “ordinary and necessary” business costs, including eligible legal fees. In one U.S. Tax Court case, a taxpayer argued he was entitled to deduct nearly $600,000 in legal expenses on his return. He claimed the expenses were related to a fraud loss at an investment company where he worked as the […]

Trump proposes changes to R&D credit

One of the many tax changes proposed by President-elect Donald Trump is to expand the Section 174 deduction for R&D expenditures. Under the Tax Cuts and Jobs Act (TCJA), R&D expenditures paid or incurred beginning in 2022 must be capitalized and amortized over five years for domestic R&D and over 15 years for foreign R&D. […]

Employers: In 2025, the Social Security wage base is going up

As we approach 2025, changes are coming to the Social Security wage base. The Social Security Administration recently announced that the wage base for computing Social Security tax will increase to $176,100 for 2025 (up from $168,600 for 2024). Wages and self-employment income above this amount aren’t subject to Social Security tax. If your business […]

Amended versus Superseding tax returns

What’s the difference between an amended tax return and a superseding return? Amended returns can be filed to correct or change information on a timely filed return, after the original or extended due date has passed. However, a superseding return is a rare opportunity to change or correct a filed return before the original or […]