The small business deduction is one of the most advantageous income tax benefits for company owners in Canada. The deduction lowers the amount of the Part 1 tax otherwise required of business owners. As of the first of January, adjusted tax rates allow a small corporation to qualify at the tax rate of 4.5% in the province of Ontario. Others will still need to pay the standard tax rate of 11.5%. Owners of Canadian businesses are encouraged to examine the tax guidelines to see if they qualify for this lower rate. A useful tool for this purpose is TurboTax Canada.
The Canada Tax Agency has released a chart detailing the varying rates of corporate taxes for different types of businesses. Data is listed for all provinces except Quebec and Alberta, which are exempt from corporate taxes. To qualify for this lower rate, Canadian companies need to meet certain criteria. Each needs to be a Canadian-controlled private company and must meet all the rules set forth in the T4012-T2 Corporate Tax Guide. Each corporation needs to have been incorporated in Canada after the first of June 1971 and must operate fully in the country for all of the given tax year. The CEO of each corporation must also be a full-time Canadian resident. Shares of each qualifying corporation must also not be traded in overseas stock exchanges.
The implementation of the Affordable Care Act continues to move forward. Failing to adjust withholding strategies and medical expenditures may result in added tax liability. What do the increased cost of healthcare and decreased deductions mean for you and your family? Here are some of the most significant changes to tax laws under the Affordable Care Act.
Higher Taxes on Investment Income
If you derive a significant percentage of your income from investments, you can expect somewhat higher taxes for the 2013 fiscal year. This typically applies to individuals who earn more than $200,000 and married couples who make over $250,000 jointly. Most other investors and taxpayers will see little or no change in the rate of taxation for their income-producing investments.
Upper Income Brackets Will See Medicare Tax Increases
Payroll taxes are often overlooked by individuals when considering their overall tax liability. Since these taxes are taken out of paychecks before workers receive them, changes in these rates can easily go unnoticed. However, couples who earn more than $250,000 jointly may get an unpleasant surprise at tax time: An increase in Medicare hospital taxes of nearly one percent may not be withheld by employers who are unaware of the joint income levels of the married couple. High-earning married couples may be responsible for any amount due that is not withheld as payroll taxes.
Reduced Deduction Percentages for Medical Expenses
Prior to the implementation of the Affordable Care Act, individuals could deduct their medical expenses if those expenses reached 7.5 percent of their adjusted gross income. That figure has now risen to 10 percent, reducing the availability of these deductions for rich and poor alike.
Changes to Flexible Spending Accounts
For 2013, only the first $2,500 deposited into flexible spending accounts (FSAs) will be tax-free. All other deposits will be liable to the regular tax rates applied to other earned income. As a result, many firms are now implementing limits of $2,500 on FSAs to eliminate the need for specialized W-2 forms and to protect their employees against potential financial liabilities when tax time rolls around once more.
New Taxes on Durable Medical Goods and Devices
The Affordable Care Act requires a new excise tax on medical devices including braces, gloves, pacemakers, nebulizers and many other items of medical equipment. While this new tax will not affect patients directly, it is likely to increase the costs of these items and may shift a greater percentage of the financial burden for advanced systems to the private individual as medical supply companies adjust their rates to make up for these added costs.
What You Can Do
Making the necessary changes to withholding, FSA contributions and other healthcare-related activities can help consumers manage the new requirements of the Affordable Care Act and can provide an added level of defense against increased taxes and reduced services in the medical arena. Make sure you consult with experienced and qualified tax experts who can advise you on the latest tax-related changes and help you navigate them.
Small business owners know that taxes can be confusing. This is true whether you have filed for several years now, or this is your first year in business. The laws change from year to year, and making sense of the federal tax laws is nearly impossible for anyone except an accountant or an attorney. If you are not careful, you could end up paying far more than you really owe. You could also end up paying too little, which will cause complications with the IRS later. In this article, we will look at some of the most important tax tips to consider and use so you are ready for your taxes.
Keep Track of the Expenses
It is extremely important that you keep track of all of your expenses throughout the year. You should use software and apps to log each of these expenses and have a central database where you can gather all of them. Keep them sorted by different criteria including type of expense, date, and overall cost. The more detailed the notes, the better. Another tax tip is to make sure you create a backup of your files, so you do not lose them. Keeping the information in the cloud can be a great way to make sure you can always access it from anywhere. Check this recent article to find out some fresh 2014 tax tips
Many small companies are unwittingly paying too much for their taxes because they are not taking advantage of all of the deductions they could and should take. These deductions are legal, and you should use them whenever appropriate. Some of the various types of deductions you could use include meals, travel, entertainment, and even health insurance. Just make sure you keep track of those expenses and keep your receipts so you can prove that they are related to your business if necessary. This tax tip makes things easier when it comes to filing. In some specific countries there is very low to zero tax rate, one of the is the BVI or the British Virgin Islands, which is an option to consider in case you pay a lot of taxes. Check this article here about the BVI tax company benefits
Another deduction that many companies are not using is for equipment. Since 2011, small businesses can deduct up to half a million dollars in equipment purchases, as well as equipment repairs. However, the catch is that the business must spend two million dollars or less on equipment for the entire year. Still, for many small businesses, this tax tip could be a huge and beneficial deduction.
Insurance for Employees
Small businesses that have employees and that offer coverage may be able to take the small business health care tax credit. The requirements for eligibility can sometimes be difficult to parse through, so talking with an accountant or an attorney about the matter is a good idea.
Just as individuals can reduce their taxes based on their charitable donations, businesses can do the same. When your business donates goods and services, it is possible to deduct the dollar amount or valuation of the items from the taxes.
These tax tips are things you should keep in mind all year long so you can save on your taxes. Make sure you get into contact with a professional when it comes time to go over and file your taxes, just so you can be sure you aren’t paying too much.
Internal Revenue Service (Photo credit: LendingMemo)
You never know when problems can occur, and this year people have experienced their fair share of unexpected problems. This summer alone people across the country are dealing with blazing wildfires, destructive storms with dangerous winds, and other natural disasters. Some people are lucky and come out of the damage relatively unscathed, but others aren’t as fortunate. Some people have had significant damage done to their property, and they’re trying to find a way to rebuild. There are also some people that aren’t dealing with disasters caused by nature, they’re dealing with problems caused by other people. Theft of expensive objects, damage done by vandals, blackmail, and other problems happen to people every day.
Many people don’t know what to do when disaster occurs. People with insurance may be able to get some help from their policy, but some policies don’t have enough coverage to completely compensate the policy holder for their loss. Luckily for tax paying American citizens, Uncle Sam has measures in place to help people in their hour of need. Financial losses incurred because of casualty, disaster, and theft losses may be tax-deductible. Tax payers can report casualty and theft can be reported on Form 4684 and Form 1040 Schedule A.
A casualty is defined as the loss, significant damage, or destruction of property because of a sudden event. In order to claim property as a casualty cost, the event that caused it must be easily identifiable and unexpected. Natural disasters like floods, earthquakes, storms, and wildfires fit the criteria, but Mother Nature doesn’t have to be the only cause of your loss. Losses due to car accidents, terrorist attacks, and vandalism can all be claimed as a casualty loss.
The IRS’ definition of theft isn’t too different from what law enforcement officials view as theft of property. The IRS defines theft as “the taking and removing of money or property with the intent to deprive the owner of it. The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent.” According to the IRS embezzlement, robbery, blackmail, burglary, extortion, larceny, and even kidnapping for ransom all full under the umbrella of theft losses.
Losses You Can’t Claim
The government offers IRS tax help to taxpayers that have experienced hardship, but there are some situations where you won’t be able to claim the property and finances you lost over the year. Property that was misplaced cannot be claimed as a loss, nor can property that was accidently broken. Tax payers may also not claim any property that has gone through progressive deterioration. In order to be tax-deductible the damage must be cause by a sudden and unexpected event. As an example, if your home was significantly damaged in a storm you would be able to claim that. If your home was damaged because of termite infestation or mold over a period of time, you would not be allowed to claim that.
Tax preparation help at the library (Photo credit: Newton Free Library)
Filing your income taxes is one of those necessary evils that nobody looks forward to. It’s a time consuming, highly detailed process that typically requires several hours of your attention. Luckily, in today’s digital world, filing your taxes doesn’t have to be such a headache. Thanks to advances in technology, you can now work with an accountant to file your taxes from the comfort of your own home. There are a couple of different options for electronic filing that help you to save time and money when you’re doing your income taxes.
Let’s face it: we’re all busy and sometimes we just don’t have the time to sit through an hours-long appointment with a tax preparer. When you add in the time spent commuting across town and finding parking, in-person meetings can really start to add up. A number of firms out there that now offer virtual income tax preparation. Some even provide online drop off service, so that you can simply send all of your tax documents in electronically without ever setting foot in a physical office. Nothing is more convenient than that.
You can either choose to work with a large tax preparation service like H&R Block, or an accountant in your area that offers virtual tax preparation services. It’s simply a personal choice based on your comfort level and preferences. Either route you choose, it’s likely you will need to have some face time with your accountant. This can be done in a few different ways. The most common way to connect is through video conferencing that’s done via the web. Some accountants will also connect with you over the phone or through a chat feature that is offered on their website.
Scheduling time to talk via video conference, phone, or live chat ensures that your taxes will be prepared according to your needs and preferences. Generally, filing your income taxes virtually requires a simple conversation at the beginning of the process in order to hammer out necessary details before your accountant gets down to the nitty-gritty of doing your taxes. You then converse by email or phone if there are questions during the process or after the return has been prepared.
Tax preparation software
An estimated 81% of people in the United States filed their taxes electronically last year. While virtual accountants are starting to become more prevalent, it’s likely that the bulk of these individuals used tax preparation services to simplify the filing process. Tax preparation software has seen a surge in popularity over the past decade, with the development of popular programs like TurboTax by Intuit which allow you to complete the filing process online from start to finish.
The program’s popularity is largely attributed to its convenience. TurboTax provides an inexpensive, easy to follow, and convenient solution for filing your income taxes. You can simply download the software or purchase it at a nearby store, run it on your computer and begin entering information from your W-2s and other tax forms. It simplifies the deduction process by taking you step by step through common (and uncommon) tax deductions. Generally, the software helps to maximize your return because it covers all the bases with tax deductions.
If you don’t finish doing your taxes on TurboTax in one sitting, you can always come back to them. The program saves your progress online or on your computer, so you can simply pick up where you left off. Once you’ve completed your tax returns, you can file with the click of a button and opt to receive your refund electronically, or via paper check in the mail. You can also pay your taxes electronically if you end up owing money. It’s a highly convenient solution with little margin for error, and a great choice if you are not particularly confident in your skills when you’re filing taxes on paper.
Thanks to today’s technology, there are a few great ways to minimize the hassle of filing your income taxes, including Intercall’s virtual events and other tech options. If you would like to explore a more convenient solution for filing, look into options for virtual accounting or consider purchasing tax preparation software to simplify the process. Tax software will save you a lot of time and potential frustration!