Are you in the early stages of divorce? In addition to the tough personal issues that you’re dealing with, several tax concerns need to be addressed to ensure that taxes are kept to a minimum and that important tax-related decisions are properly made. Here are five issues to consider if you’re in the process of getting a divorce.
When the COVID-19 pandemic forced lockdowns in Spring 2020, many not-for-profit organizations initially resisted laying off employees. Retention tax credits provided under the CARES Act helped. But nonprofits that are still struggling may think they have no choice but to cut compensation expenses, especially as high inflation increases the cost of other expenses.
However, your organization may still have alternatives to terminating employees. Here are some ideas for organization-wide cost cutting.
There’s a valuable tax deduction available to a C corporation when it receives dividends. The “dividends-received deduction” is designed to reduce or eliminate an extra level of tax on dividends received by a corporation. As a result, a corporation will typically be taxed at a lower rate on dividends than on capital gains.
Ordinarily, the deduction is 50% of the dividend, with the result that only 50% of the dividend received is effectively subject to tax. For example, if your corporation receives a $1,000 dividend, it includes $1,000 in income, but after the $500 dividends-received deduction, its taxable income from the dividend is only $500.
As a result of the current estate tax exemption amount ($12.06 million in 2022), many people no longer need to be concerned with federal estate tax. Before 2011, a much smaller amount resulted in estate plans attempting to avoid it. Now, because many estates won’t be subject to estate tax, more planning can be devoted to saving income taxes for your heirs.
Recently, the Association of Certified Fraud Examiners (ACFE) published its biannual Report to the Nations: 2022 Global Study on Occupational Fraud and Abuse. Of all the types of organizations surveyed by the ACFE, not-for-profits actually were the least likely to experience occupational fraud. However, nonprofits also are generally the least likely to be able to afford fraud losses. So it’s important for your organization’s leaders to understand the risks and take steps to prevent criminal activity.
Here’s an interesting option if your small company or start-up business is planning to claim the research tax credit. Subject to limits, you can elect to apply all or some of any research tax credits that you earn against your payroll taxes instead of your income tax. This payroll tax election may influence some businesses to undertake or increase their research activities. On the other hand, if you’re engaged in or are planning to engage in research activities without regard to tax consequences, be aware that some tax relief could be in your future.
Here are some answers to questions about the option.
Some people who begin claiming Social Security benefits are surprised to find out they’re taxed by the federal government on the amounts they receive. If you’re wondering whether you’ll be taxed on your Social Security benefits, the answer is: It depends.
A lot has happened in the past couple of years. So if your not-for-profit hasn’t conducted an executive search since before the pandemic, anticipate an altered search landscape. For example, the job market now is tighter and, given the prevalence of working from home, you may want to consider executive candidates outside your geographic area who aren’t willing to relocate.
But, as always, an executive search plan can help the process. Before you start looking, form a search committee of board members and arrive at some consensus about the kind of leader you’d like to hire.
The next quarterly estimated tax payment deadline is June 15 for individuals and businesses so it’s a good time to review the rules for computing corporate federal estimated payments. You want your business to pay the minimum amount of estimated taxes without triggering the penalty for underpayment of estimated tax.
The downturn in the stock market may have caused the value of your retirement account to decrease. But if you have a traditional IRA, this decline may provide a valuable opportunity: It may allow you to convert your traditional IRA to a Roth IRA at a lower tax cost.