LLC or C corporation?

Among the many decisions you need to make when launching a business is selecting a business structure. If you do nothing, your business, by default, is structured as either a general partnership (multiple owners) or sole proprietorship (solo owner). These may be the simplest entities to form, but they offer one major drawback: There’s no separation between the business and business owner.

If your partnership or sole proprietorship business is sued or can’t pay its bills, your personal assets can be on the hook. That is why both the Limited Liability Company (LLC) and C corporation, or just corporation, are popular business structures, as they minimize the owner’s personal liability. Yet, they have vastly different approaches to taxation.

Here are 5 differences to think about when deciding on structure:
1. Pass-through business structure vs. non pass-through entity
2. Ability to leave money in the company
3. Social security and Medicare taxes
4. Ability to deduct a loss
5. Employee benefits

When it comes to choosing a structure, there’s no single right answer that works for every business. You need to think about your financial situation and future plans to determine the optimal structure for your needs.

Courtesy of Entrepreneur

For help deciding which business structure is best for you contact Neikirk, Mahoney and Smith at 502-896-2999

Students Working this Summer

Many students get summer jobs. It’s a great way to earn extra spending money or to save for later. Here are some topics you might need help with:
1. Withholding and Estimated Tax.
2. New Employees.
3. Self-Employment.
4. Tip Income.
5. Payroll Taxes.
6. Newspaper Carriers.
7. ROTC Pay.
8. Use IRS Free File.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Summer camp may be tax deductible

Expenses associated with summer camp may result in a tax break in the form of the child care credit so long as they are work-related. There are, however, some rules and restrictions for claiming summer camp expenses on your taxes:

Overnight camp is fun for the parents but doesn’t qualify for the credit.

Chess camp might be okay. The cost of sending your child to a day camp may be a qualifying expense, even if the camp specializes in a particular activity.

The forms matter. To claim a credit for child care expenses, you’ll need to attach a federal form 2441 to a federal form 1040, federal form 1040A, or form 1040NR.

Stay at home and unemployed spouses make you ineligible for the credit.

Some of the expenses involved in simply getting ready for camp are deductible. That includes physicals (you do not have to be sick for a physical or well exam to be deductible); shots (vaccines and immunizations are considered preventative care and are deductible); and fees for doctors to complete forms for camp.

Courtesy of Forbes

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

IRS Warns Consumers of Possible Scams Relating to Orlando Mass Shooting

The Internal Revenue Service today issued a consumer alert about possible fake charity scams emerging due to the mass shooting in Orlando, Fla., and encouraged taxpayers to seek out recognized charitable groups.

When making donations to assist victims of the terrible tragedy, there are simple steps taxpayers can take to ensure their hard-earned money goes to legitimate charities. IRS.gov has the tools taxpayers need to quickly and easily check out the status of charitable organizations.

While there has been an enormous wave of support across the country for the victims and families of Orlando, it is common for scam artists to take advantage of this generosity by impersonating charities to get money or private information from well-meaning taxpayers. Such fraudulent schemes may involve contact by telephone, social media, e-mail or in-person solicitations.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Advisory Committee Pushes IRS to Go Further on Digital

The Electronic Tax Administration Advisory Committee issued its annual report Wednesday, with recommendations calling on the Internal Revenue Service to expand its electronic filing efforts and digital strategy, and to offer end-to-end capabilities on online accounts for both taxpayers and tax professionals.
The ETAAC report noted that in 2016, the IRS publicly committed to a Future State Initiative and digital service model that embraces technology to improve the taxpayer service experience, in line with recommendations in ETAAC’s 2015 report. In this year’s report, ETAAC made recommendations on how the IRS should go further to optimize the taxpayer experience.

Courtesy of AccountingToday

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Empowerment Zone Designations Continue Through the End of 2016

The Internal Revenue Service today announced that all empowerment zone designations remain in effect through the end of 2016. Empowerment Zones are certain urban and rural areas where employers and other taxpayers qualify for special tax incentives.

Today’s announcement primarily affects businesses that would benefit from claiming the tax incentives for empowerment zones on their 2015 returns, either original or amended, and 2016 returns.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Child and Dependent Care Credit this Summer

Day camps are common during the summer months. Many parents enroll their children in a day camp or pay for day care so they can work or look for work. If this applies to you, your costs may qualify for a federal tax credit. Here are 10 things to know about the Child and Dependent Care Credit:
1. Care for Qualifying Persons.
2. Work-related Expenses.
3. Earned Income Required.
4. Joint Return if Married.
5. Type of Care.
6. Credit Amount.
7. Expense Limits.
8. Certain Care Does Not Qualify.
9. Keep Records and Receipts
10. Dependent Care Benefits.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999