KAFM Money Tips: Business Bankruptcies

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Tax-Savings Tips: September 2022

Tax-Saving Tips   September 2022 Earn 9.62 Percent Tax-Deferred Interest with Series I Bonds   Inflation is seldom a good thing.   But when it comes to investing, the U.S. Treasury Department has an inflation opportunity that’s downright amazing. You can buy bonds that pay 9.62 percent interest—tax-deferred—with no downside risk, and with no state or local income taxes when you cash them in.   If you buy now, you earn that 9.62 percent for six months, guaranteed. At the end of six months, the Treasury Department   ·          adds the interest you earned to your principal, and ·          pays interest on your new principal balance at the new rate it will determine this year, on November 1.   Example. You buy $10,000 of Series I bonds on September 24. You earn 9.62 percent for six months for a total of $481 ($10,000 x 9.62 percent ÷ 2). On March 24, your principal balance is $10,481 ($10,000 + 481).   Let’s say Treasury sets the November 1 interest rate at
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Tax Savings Tips: July 2022

  Self-Employment Tax Basics   If you own an unincorporated business, you likely pay at least three different federal taxes. In addition to federal income taxes, you must pay Social Security and Medicare taxes, also called the self-employment tax.   Self-employment taxes are not insubstantial. Indeed, many business owners pay more in self-employment taxes than in income tax. The self-employment tax consists of   ·          a 12.4 percent Social Security tax up to an annual income ceiling ($147,000 for 2022) and ·          a 2.9 percent Medicare tax on all self-employment income.   These amount to a 15.3 percent tax, up to the $147,000 Social Security tax ceiling. If your self-employment income is more than $200,000 if you’re single or $250,000 if you’re married filing jointly, you must pay a 0.9 percent additional Medicare tax on self-employment income over the applicable threshold for a total 3.8 percent Medicare tax.   You pay the self-employment tax if you earn
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Tax Savings Tips: August 2022

  Claim Your 2020 and 2021 ERC Now (Yes, in 2022)   During much of 2020 and 2021, you may have qualified for the Employee Retention Credit (ERC). Lawmakers created this tax credit in response to the COVID-19 pandemic.   With the ERC, you found (or could find) tax credits of up to $26,000 per employee. That’s a lot. With 10 employees, that’s $260,000.   Key point. If you have not claimed the ERC, you can amend your 2020 and 2021 payroll tax returns for the credit. (Amending the payroll is not difficult—so no sweat on that score.)   Three Ways to Qualify   1.       Decline in gross receipts (on a quarterly basis, by more than 50 percent in 2020 compared with 2019, and by more than 20 percent in 2021 compared with 2019) 2.       A COVID-19 government order that caused a full or partial shutdown (think physical space) 3.       A COVID-19 government order that caused more than a nominal effect (think modification of activity)   Two Types of ERC Qualifications: R
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