Whether your company supplies business vehicles to employees as “perks” or as necessary tools to help get their work done, their personal use of the vehicle has tax implications. An employee’s personal use of a company vehicle generally must be treated as a non-cash fringe benefit that is also subject to social security taxes. Fortunately, the tax rules give you some flexibility in valuing personal usage of a company vehicle. You can choose from among four valuation methods: The general fair market value method, which is based on what a person would pay locally to lease a comparable vehicle for a period of time comparable to the period of time the employee has use of the vehicle; The lease value
Tool Reimbursement Plans – Do You Meet the IRS Guidelines?
If you do not have a tool reimbursement plan for your employees you may wish to incorporate this if you require them to supply their own hand tools on the job site. The tax code allows properly configured tool reimbursement allowances to be tax free to the employee and deductible to the employer. Tool reimbursements are also not subject to payroll taxes if it is made under an accountable plan. To be treated as an accountable plan, an expense reimbursement must meet all of the following requirements: Business connection – the reimbursed expense must be allowable as a deduction and it must be paid or incurred while performing services as an employee of the employer. Substantiation – the employee must
S Corporation Health Insurance
This letter is to advise you of the tax benefits available to certain S corporation shareholders for health insurance costs. Heath and accident insurance premiums paid on behalf of the more than 2% S corporation shareholders are included in the recipient’s Form W-2 as taxable wage income and the S corporation takes a compensation deduction. The S corporation cannot take the deduction as a direct health insurance expense for the more than 2% shareholders. These benefits are not subject to Social Security or Medicare (FICA) or Unemployment (FUTA) taxes. The additional compensation is included in Box 1 (Wages) of the Form W-2, issued to the shareholder, but would not be included in Boxes 3 and 5 of Form W-2. Payments
New 1099 Questions on Business Returns
NEW 1099 QUESTIONS ON BUSINESS RETURNS Generally, any trade or business that makes payments in the course of that trade or business of interest, rents, compensations, remuneration for services, annuities, etc. aggregating $600 or more for the year to a single payee is required to report the payments to the IRS and to the recipient of the payments by filing Form 1099. This reporting requirement generally does not apply to payments to corporations. However, the 1099 reporting requirements do apply to payments made to corporations for attorneys’ fees, and to amounts paid to corporations providing medical or health care services. In addition, if a business makes a payment otherwise required to be reported on Form 1099, the payment is
2012 Year End Tax Letters
Hello Everyone, The 2012 Year Tax Letters are now available to view 2012 Individual Letter 2012 Corporate Letter 2012 New Developments Letter
2011 Year End Corporate and Non-Corporate Businesses
We have reached that time of year when businesses need to consider year-end tax planning. This year is particularly challenging because Congress has enacted a series of tax breaks which are generally scheduled to expire after 2011. For example, unless Congress acts to extend these provisions, the following business tax breaks will generally expire (or become less beneficial) after 2011: 100% §168 bonus depreciation; larger and expanded §179 deduction; 100% gain exclusion for “qualified small business stock;” and relaxation of the S corporation built‑in gains tax rules. There have also been recent IRS releases and Court cases that address: the ability of self-employed individuals, partners, and S corporation shareholders to deduct health insurance premiums (including Medicare premiums); whether compensation