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Tax Tips Small Business

Employers of Tipped Employees Allowed a Tax Credit

Are you getting the credit you deserve?

If you are an employer in the food and beverage industry, you may be entitled to a tax credit for the social security and Medicare taxes you pay on your employees' tip income. You must meet both of the following requirements to qualify for the credit:

Small Business Quick Tip

The Social Security wage base increases to $102,000 in 2008, up from $97,500 for 2007. This means that you are no longer required to withhold social security tax for employees after meeting this threshold. However, you are required to withhold Medicare taxes regardless of the amount of wages paid.

HSA Funding Options

For a limited time only, there are more options

Health Savings Accounts (HSAs) are a great tax vehicle for making the most of your medical expenses. However, it's not always easy to come up with the money to fund an HSA. Well, now there are more options available to HSA owners. At any time before 2012, you can make a one-time only tax-free rollover from an IRA to an HSA. This rollover amount may not be more than your HSA maximum contribution for your type of coverage, whether individual or family.

The transfer must be made via a direct trustee-to-trustee rollover. Because the rollover is tax-free, you won't receive a deduction for funding the HSA in this manner. Also, if you have a flex spending account (FSA) or a health reimbursement arrangement (HRA), you can make a one-time rollover into an HSA from one of these accounts. This tax-free rollover may not exceed the lesser of the balance in such an account on September 21, 2006, or on the date of the rollover distribution. Like the IRA rollover option, this rollover must also be completed via a trustee-to-trustee transfer. Talk to your tax preparer in deciding if one of these options is right for you.

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Wednesday, 03 December 2008

What is an Enrolled Agent and why should I care?

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Tax Tips Personal

Take Advantage of Tax Savings in a Down Market

Know when you have a deductible loss

Just because the stock market lost money, doesn't mean you have a deductible loss. As long as you hold on to an investment, you only have a loss on paper. It's only when you actually sell the investment that you have a transaction to report on your tax return.

Fortunately, the tax law allows you to offset your capital gains by your capital losses. You can avoid or minimize taxable gain by selling two investments, one at a gain and the other at a loss.

Personal Quick Tip

Not only will you save money at the pump if you buy a hybrid vehicle, you may be eligible for a credit on your income tax return.