Editor's note

I've handpicked articles and stories that resonate with both my clients and myself, with the goal of providing you with valuable, practical insights that you may find both informative and useful.

Saturday, December 11, 2021

Is Your Business Eligible for the Research and Development Tax Credit?

 Has your business encountered and solved technological challenges in recent years? Maybe you invested in software development, re-engineered manufacturing processes, or performed laboratory testing. If so, your business may be eligible for the federal research and development (R&D) tax credit. This credit may be available to U.S. businesses that spent money to develop new products or improve the performance, functionality, reliability, or quality of existing products or trade processes — whether the work was done by employees or a third-party contractor.

Section 41 of the Internal Revenue Code lays out the rules and regulations for the R&D tax credit. The Protecting Americans from Tax Hikes (PATH) Act of 2015 made the credit permanent and broadened its scope to include many small to midsize businesses.

Supply-Chain Chaos: Holiday Edition

 The supply chain is the network by which products flow from the factories of suppliers to the inventories of retailers so they can ultimately be purchased by consumers. Corporate supply chains have been under pressure since the pandemic began, but the stress intensified in the latter months of 2021, with demand for goods surging and the holiday season fast approaching.1

The California ports that receive about 40% of U.S. imports are now operating 24/7, but workers still can’t keep up with the rush of container ships arriving from overseas. In mid-November, there was a record backlog of vessels waiting offshore for more than two weeks to unload their cargo.2 Other U.S. ports are also congested, and severe shortages of truck drivers and warehouse workers have further slowed the distribution of goods throughout the nation. These bottlenecks held up finished merchandise, as well as the inputs and raw materials needed to manufacture products domestically.

Monday, November 15, 2021

Do You Have a Tax-Smart Withdrawal Strategy?

 Your plan for drawing down retirement assets could be just as important as your approach to accumulating retirement savings. Experts recommend various methods, such as the so-called 4% rule — withdrawing 4% of your nest egg each year (with adjustments for inflation) — or a three-phase system dividing your assets into groups for short-term, mid-term, and long-term retirement needs.

Before you make any final decisions, it would be wise to consider the tax consequences of your withdrawal strategy.

Thursday, October 7, 2021

What Is the Capital Gain Tax?

 Capital gains are the profits realized from the sale of capital assets such as stocks, bonds, and property. The capital gain tax is triggered only when an asset is sold, not while the asset is held by an investor. However, when a mutual fund sells shares of its holdings during the year, mutual fund investors could be charged capital gains. (A fund’s capital gains distribution is not taxable if the fund is held in a tax-deferred account.)

There are two types of capital gains: long term and short term; each is subject to different tax rates. Long-term gains are profits on assets held longer than 12 months before they are sold by the investor. The American Taxpayer Relief Act of 2012 instituted a long-term capital gains tax rate for taxpayers of up to 20%. Short-term gains (on assets held for 12 months or less) are taxed as ordinary income at the seller’s marginal income tax rate.

Social Security’s Uncertain Future: What You Should Know

Social Security is a pay-as-you-go system, which means today’s workers are paying taxes for the benefits received by today’s retirees. However, demographic trends such as lower birth rates, higher retirement rates, and longer life spans are causing long-run fiscal challenges. There are simply not enough U.S. workers to support the growing number of beneficiaries. Social Security is not in danger of collapsing, but the clock is ticking on the program’s ability to pay full benefits.

Each year, the Trustees of the Social Security Trust Funds provide a detailed report to Congress that tracks the program’s current financial condition and projected financial outlook. In the latest report, released in August 2021, the Trustees estimate that the retirement program will have funds to pay full benefits only until 2033, unless Congress acts to shore up the program. This day of reckoning is expected to come one year sooner than previously projected because of the economic fallout from the COVID-19 pandemic.

Thursday, September 30, 2021

Audit: IRS Needs to Improve How It Wipes Taxpayer Data from Devices

 Computer and laptop hard drives that aren’t properly scrubbed could allow exposure of private taxpayer data.

A report from the U.S. Treasury Inspector General for Tax Administration found flaws regarding how the IRS sanitizes—or gets rid of—taxpayer data contained on agency-owned desktop computers and laptop hard disks.

Read more at NextGov - 2 min. read

IRS: New Contracts Awarded to Private Collection Agencies

WASHINGTON — The Internal Revenue Service has awarded new contracts to three private-sector collection agencies for collection of overdue tax debts. The new contracts begin Thursday following today's expiration of the old contracts.

Beginning Thursday, Sept. 23, 2021, taxpayers with unpaid tax bills may be contacted by one of the following three agencies:

CBE Group, Inc.
PO Box 2217
Waterloo, IA 50704
800-910-5837

Coast Professional, Inc.
PO Box 526
Albion, NY 14411
888-928-0510

ConServe
PO Box 307
Fairport, NY 14450
844-853-4875

The IRS will always notify a taxpayer before transferring their account to a private collection agency (PCA).

Read more at IRS.gov - 5 min. read

Monday, September 27, 2021

How the wealthy are preparing for higher taxes

 As Democrats get closer to raising taxes, financial advisors and their well-off clients are taking steps now to avoid some of those steeper levies later.  “Our clients are concerned,” said Michael Nathanson, CEO and chair of The Colony Group. “This would be among the largest tax increases in history.”

Read more at CNBC - 4 min. read

Saturday, September 25, 2021

North Carolina Woman Sentenced to 36 Months in $1.49 Million Tax Preparer Case

According to the United States Attorney's Office, Middle District of North Carolina, Nikki Decole Cunningham-Quick - a tax preparer and owner of Nikki's Tax Service in Raeford, North Carolina - routinely included false items on federal income tax returns of some clients, including the use of false dependents, false income, and false education credits. According to court records, the tax loss from the fraudulent returns she prepared totalled $1,494,924.26.

Wednesday, September 22, 2021

A looming crackdown on a popular retirement tax strategy has some investors worried

 via MarketWatch

Roth conversions are one way Americans can save on their tax liabilities in retirement - but the House recently proposed a bill that would curb these conversions for high earners.  While this may appear to be bad news for some workers, there is a silver lining ...

Read more - 5 min. read

Articles of Interest to My Clients: