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Tax Literacy

  • The Tax Facts for Business Owners
    Submitted on 11 October 2012

    Be Attentive to Employee and Worker ConcernsBe Attentive to Employee and Worker Concerns

    As part of our blog series on tax literacy, MBDA will highlight the latest tax-related news issued by the IRS for business owners.  The material presented in this website is not offered as legal or tax advice.  You are urged to seek the advice of your tax advisor, attorney, and/or financial planner for any issue related to tax obligations.

    Payroll

    Maintaining good payroll records is critical for both you and your employees. Keep all records of employment taxes for at least 4 years. They should be available for IRS review. The following is a list of some of the records you should keep:

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  • Keep Track of Expenses—on the Road and in Your Home
    Submitted on 24 September 2012

    Created on September 24, 2012
     

    All Those Extras Add UpCar Expenses

    To take a business deduction for the use of your car, you must determine what percentage of the vehicle was used for business. No deduction is allowed for strictly personal use, such as commuting.

    Deductible car expenses can include the cost of: 1) traveling from one workplace to another, 2) making business trips to visit customers or attending business meetings away from your regular workplace, and 3) traveling to temporary workplaces.

    It is important to keep complete records to substantiate items reported on a tax return. In the case of car and truck expenses, the types of records required depend on whether you claim the standard mileage rate or actual expenses.

    Standard mileage rate: To claim the standard mileage rate, appropriate records would include documentation identifying the vehicle and proving ownership or a lease and documentation showing miles traveled, destination and business purpose. The 2012 standard mileage rates for the use of a car (including vans, pickups or panel trucks) are on www.irs.gov, search: standard mileage rate. If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then in later years, you can choose to use either the standard deduction or actual expenses.

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  • IRS Encourages Small Employers to Check Out Small Business Health Care Tax...
    Submitted on 29 March 2012

    With business tax-filing deadlines fast approaching, the Internal Revenue Service today encouraged small employers that provide health insurance coverage to their employees to check out the small business health care tax credit and then claim it if they qualify.

    The recently-revamped Small Business Health Care Tax Credit page on IRS.gov is packed with information and resources designed to help small employers see if they qualify for the credit and then figure it correctly. These include a step-by-step guide for determining eligibility, examples of typical tax savings under various scenarios, answers to frequently-asked questions, a YouTube video and a webinar.

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  • 6 Things You Need to Know About Estimated Taxes
    Submitted on 20 March 2012

    Estimated Taxes CalculatorEstimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

    Estimated tax is used to pay income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you do not pay enough through withholding or estimated tax payments, you may be charged a penalty. If you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.

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  • Prepare for Tax Season
    Submitted on 25 January 2012

    Check out IRS Small Business and Self-Employed Tax Center

    Your Small Business Advantage, Put Their Knowledge to Work for You

    When you’re running a business, you don’t need to be a tax expert, too. But you do need some tax basics. IRS Small Business Advantage gives you the  information you need to stay tax compliant so your business can thrive. 

    AccountingChoosing a Tax Professional

    With your new responsibilities, you may decide to hire a professional tax preparer to assist with your taxes. Enrolled agents, tax attorneys, and certified public accountants have training and expertise in federal taxes. When selecting a tax professional, ask a few questions to see if he/she offers what you are looking for:

    Experience: Does the tax professional have experience in working with similar size and type businesses? Is the professional familiar with your particular line of business?

    Services: Does the tax professional offer electronic filing—the safest and most efficient way to file your tax returns?

    Price: What does the tax professional charge for services? If the IRS examines your return, what is the tax professional’s policy on assisting you? Is the tax professional authorized to practice before the IRS?

    Qualifications: New regulations require all paid tax return preparers to register with the IRS and obtain a Preparer Tax Identification Number (PTIN). Ensure that the tax professional you choose has a PTIN.

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  • Getting Ready for Tax Season: IRS Preparation
    Submitted on 20 January 2012

    Health Care Tax Credit

    Health Care Tax CreditHealth coverage legislation enacted in 2011 included a Small Business Health Care Tax Credit to help small businesses and small tax-exempt organizations provide health insurance coverage to their employees.

    Small businesses and tax-exempt organizations providing health insurance coverage will qualify for a special tax credit. Included in the health care reform legislation, the Patient Protection and Affordable Care Act encourages small business employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small business employers paying at least half the cost of single coverage for their employees.

    Go to www.irs.gov, search: Health Care Tax Credit.

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Did you know...

Between 2002 and 2007, minority-owned firms outpaced the growth of non-minority firms in gross receipts, employment, and number of firms. Minority firms are an engine of job creation.
Graph for MBE Growth

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