- December 15 – Due date for calendar-year corporations to pay the last installment of 2016 estimated income tax.
- December 31 – Deadline to complete 2016 tax-free gifts of up to $14,000 per recipient.
- December 31 – Deadline for paying expenses you want to be able to deduct on your 2016 income tax return.
For 2017, the wage base for withholding social security tax from wages has increased to $127,200, up from $118,500 in 2016. The "wage base" is the amount of wages on which employers and employees must pay the 6.2% social security tax. The increased wage base means an additional $8,700 of your income is taxed.
The wage base does not affect the 1.45% Medicare payroll tax. Medicare tax is assessed on all wages and net income from self-employment, including amounts above the base. The 0.9% Additional Medicare Tax is not affected either. That tax applies to your compensation in excess of $250,000 when you're married filing jointly ($200,000 when you're single).
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Losses can be hard to take – so if you think your S corporation will show a loss for 2016, now's the time to plan to make sure you'll get the full tax benefit.
The problem. The amount of the business loss you can deduct on your individual income tax return is limited to your basis in your S corporation stock and certain corporate debt. This is true even if the loss reported to you on Schedule K-1 is greater than your basis.
Here's how basis works. Typically, stock basis in an S corporation begins with the capital contribution you make to get the company started. Note that when you receive stock as a gift, an inheritance, or in place of compensation, your initial basis is calculated differently.
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The social security coverage threshold for domestic employees, including nannies, will remain at $2,000 for 2017, the same as the 2016 threshold. If your household workers earn less than $2,000, you do not have to pay social security or Medicare taxes on wages paid to those employees. When you pay your household employees more than the threshold, you're required to pay social security tax of 6.2% and Medicare tax of 1.45%. The $2,000 threshold applies separately to each employee.
Here's a quick review of some of the rules you can expect to encounter when you get ready to prepare your 2016 federal income tax return.
Income tax rates. For 2016, ordinary federal income tax rates range from 10% to 35% unless your taxable income exceeds $415,050 when you're single or $466,950 if you're married filing jointly. The rate on income above those amounts is 39.6%.
Tax breaks that are now permanent. Three tax breaks you'll be able to take on your 2016 return, and on future returns: 1) The optional deduction for state and local sales tax in lieu of state and local income tax; 2) the $250 deduction for classroom supplies if you're an educator; and 3) IRA-to-charity transfers of up to $100,000 when you're 70½ or older.
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