Also known as QBI or 199A deduction, the TCJA introduced a new significant 20% deduction for small and medium business owners. The benefit phases out for service businesses with profits >$161/$321 (Single/MFJ), while they phase in for non-service businesses based on wages paid and property value. Sole Proprietors, LLCs and S-Corps use pass-through taxation in […]
QBI Pass-Through Deduction Read More »
S-Corp receives a favorable tax treatment when compared to a Sole Proprietorship, by splitting its earnings between Salary and Unearned Distribution, and in which the latter is not subject to Self-Employment tax. The Self-Employment (SE) tax is the employee and employer portions of the FICA tax. The FICA tax has two components: Social Security tax
Taxation of Sole Proprietorship vs. S-Corp Read More »
Taxation and management overhead dictate the choice of business structure. The latter includes, in increasing order of complexity, Sole Proprietorship, LLC, S-Corp and C-Corp. The simplest corporate structure is Sole Proprietorship for which the only paperwork required is capturing your business revenue and expenses in Schedule C. However, this structure offers no separation between personal
Business Corporate Structures Read More »
We discuss the personal tax consequences related to Capital Loss deductions, Wash Rule, Foreign Tax Credit, Stock Options, Provisional Income, AMT, Rule 72(t), inheritance and gifts. Capital Loss and Wash Rule: Capital Loss will first offset any Capital Gains, and if there is still a net Capital Loss, then it can offset up to $3K
Miscellaneous Tax Topics Read More »
We summarize here the significant changes brought about by the TCJA law of 2017. Unless renewed by Congress, these changes will sunset in 2025. Tax bracket rates lowered: There are still 7 tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, 37%, but their respective rates have been lowered. The application of these tax brackets to
Key Aspects of the TCJA Law Read More »
Personal Income tax components include Federal, State and FICA. We provide a summary of Federal tax brackets and example calculations for an individual with $100K and $200K AGI. Income tax has three components: Federal, State and FICA. Taxable income for Federal taxes is either Ordinary Income or Long-Term Capital Gains (LTCG). The Ordinary Income portion
Quick Income Tax Calculation Read More »
An overview of the Federal income tax calculation starting from your paycheck, which shows how income is defined for tax purposes and where the deductions are taken. We present an overview of the Federal income tax calculation in Form 1040 starting from the W2. The W2 has two types of deductions: FICA and pre-tax. Items
Income Tax Calculation Flow and Deductions Read More »
The FAFSA process discounts the income and assets of students differently than the income and assets of parents in order to calculate the family contribution (EFC) amount. Understanding these components is important to maximizing the financial aid package. The Government-sponsored financial aid programs are summarized in our blog “Types of Financial Aid.” Need-based Federal aid
A college financial aid package is a combination of merit-based grants from universities or private institutions, and need-based loans or grants from the Government. There are three types of financial aid: Grants, Loans and Work-Study Program (WSP). Grants are awards that do not require repayment, whereas loans need to be paid back. Financial aid can
Types of Financial Aid Read More »
The 529 college savings plan allows after-tax investment to grow and be withdrawn tax-free for qualified education-related expenses. The state-run 529 plans are the newer and better version of the ESA Coverdell plans offered by private brokerage firms. Here are the key features of the 529 college savings plan. Tax Benefits: 529 plans have Roth-like
College Savings Plan Read More »
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