Business Tax

2022 Q4 tax calendar: Key deadlines for businesses and other employers

October 3, 2022 by Rikard Neal

2022 Q4 tax calendar: Key deadlines for businesses and other employers

Here are some of the key tax-related deadlines affecting businesses and
other employers during the fourth quarter of 2022. Keep in mind that this
list isn’t all-inclusive, so there may be additional deadlines that apply
to you. Contact us to ensure you’re meeting all applicable deadlines and to
learn more about the filing requirements.

Note: Certain tax-filing and tax-payment deadlines may be postponed for
taxpayers who reside in or have businesses in federally declared disaster
areas.

Monday, October 3

The last day you can initially set up a SIMPLE IRA plan, provided you (or
any predecessor employer) didn’t previously maintain a SIMPLE IRA plan. If
you’re a new employer that comes into existence after October 1 of the
year, you can establish a SIMPLE IRA plan as soon as administratively
feasible after your business comes into existence.

Monday, October 17

If a calendar-year C corporation that filed an automatic six-month
extension:
- File a 2021 income tax return (Form 1120) and pay any tax, interest
  and penalties due.
- Make contributions for 2021 to certain employer-sponsored
  retirement plans.

Monday, October 31

Report income tax withholding and FICA taxes for third quarter 2022
(Form 941) and pay any tax due. (See exception below under “November
10.”)

Thursday, November 10

Report income tax withholding and FICA taxes for third quarter 2022
(Form 941), if you deposited on time (and in full) all of the
associated taxes due.

Thursday, December 15

If a calendar-year C corporation, pay the fourth installment of 2022
estimated income taxes.

Contact us if you’d like more information about the filing requirements and
to ensure you’re meeting all applicable deadlines.

Numerous tax limits affecting businesses have increased for 2022

January 25, 2022 by Rikard Neal

Many tax limits that affect businesses are annually indexed for inflation, and a number of them have increased for 2022. Here’s a rundown of those that may be important to you and your business.

Social Security tax

The amount of an employee’s earnings that is subject to Social Security tax is capped for 2022 at $147,000 (up from $142,800 in 2021).

Deductions

Standard business mileage rate, per mile: 58.5 cents (up from 56 cents in 2021)
Section 179 expensing:
- Limit: $1.08 million (up from $1.05 million in 2021)
- Phase-out: $2.7 million (up from $2.62 million)
Income-based phase-out for certain limits on the Sec. 199A qualified business income deduction begins at:
- Married filing jointly: $340,100 (up from $329,800 in 2021)
- Single filers: $170,050 (up from $164,900)

Business meals

In 2022 and 2021, the deduction for eligible business-related food and beverage expenses provided by a restaurant is 100% (up from 50% in 2020).

Retirement plans

Employee contributions to 401(k) plans: $20,500 (up from $19,500 in 2021)
Catch-up contributions to 401(k) plans: $6,500 (unchanged)
Employee contributions to SIMPLEs: $14,000 (up from $13,500)
Catch-up contributions to SIMPLEs: $3,000 (unchanged)
Combined employer/employee contributions to defined contribution plans: $61,000 (up from $58,000)
Maximum compensation used to determine contributions: $305,000 (up from $290,000)
Annual limit for defined benefit plans: $245,000 (up from $230,000)
Compensation defining a highly compensated employee: $135,000 (up from $130,000)
Compensation defining a “key” employee: $200,000 (up from $185,000)

Other employee benefits

Qualified transportation fringe-benefits employee income exclusion: $280 per month (up from $270 per month)
Health Savings Account contributions:
- Individual coverage: $3,650 (up from $3,600)
- Family coverage: $7,300 (up from $7,200)
- Catch-up contribution: $1,000 (unchanged)
Health care Flexible Spending Account contributions: $2,850 (up from $2,750)

These are only some of the tax limits that may affect your business and additional rules may apply. Contact us if you have questions.

2022 Q1 tax calendar: Key deadlines for businesses and other employers

December 28, 2021 by Rikard Neal

Here are some of the key tax-related deadlines affecting businesses and other employers during the first quarter of 2022. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

January 17 (The usual deadline of January 15 is a Saturday)

Pay the final installment of 2021 estimated tax.
Farmers and fishermen: Pay estimated tax for 2021.

January 31

File 2021 Forms W-2, “Wage and Tax Statement,” with the Social Security Administration and provide copies to your employees.
Provide copies of 2021 Forms 1099-MISC, “Miscellaneous Income,” to recipients of income from your business where required.
File 2021 Forms 1099-MISC, reporting nonemployee compensation payments in Box 7, with the IRS.
File Form 940, “Employer’s Annual Federal Unemployment (FUTA) Tax Return,” for 2021. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it’s more than $500, you must deposit it. However, if you deposited the tax for the year in full and on time, you have until February 10 to file the return.
File Form 941, “Employer’s Quarterly Federal Tax Return,” to report Medicare, Social Security and income taxes withheld in the fourth quarter of 2021. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until February 10 to file the return. (Employers that have an estimated annual employment tax liability of $1,000 or less may be eligible to file Form 944, “Employer’s Annual Federal Tax Return.”)
File Form 945, “Annual Return of Withheld Federal Income Tax,” for 2021 to report income tax withheld on all non-payroll items, including backup withholding and withholding on accounts such as pensions, annuities and IRAs. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year in full and on time, you have until February 10 to file the return.

February 28

File 2021 Forms 1099-MISC with the IRS if: 1) they’re not required to be filed earlier and 2) you’re filing paper copies. (Otherwise, the filing deadline is March 31.)

March 15

If a calendar-year partnership or S corporation, file or extend your 2021 tax return and pay any tax due. If the return isn’t extended, this is also the last day to make 2021 contributions to pension and profit-sharing plans.

Employers: The Social Security wage base is increasing in 2022

October 25, 2021 by Rikard Neal

Employers: The Social Security wage base is increasing in 2022

The Social Security Administration recently announced that the wage base for computing Social Security tax will increase to $147,000 for 2022 (up from $142,800 for 2021). Wages and self-employment income above this threshold aren’t subject to Social Security tax.

Background information

The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees and self-employed workers — one for Old Age, Survivors and Disability Insurance, which is commonly known as the Social Security tax, and the other for Hospital Insurance, which is commonly known as the Medicare tax.

There’s a maximum amount of compensation subject to the Social Security tax, but no maximum for Medicare tax. For 2022, the FICA tax rate for employers is 7.65% — 6.2% for Social Security and 1.45% for Medicare (the same as in 2021).

2022 updates
For 2022, an employee will pay:

6.2% Social Security tax on the first $147,000 of wages (6.2% of $147,000 makes the maximum tax $9,114), plus
1.45% Medicare tax on the first $200,000 of wages ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return), plus
2.35% Medicare tax (regular 1.45% Medicare tax plus 0.9% additional Medicare tax) on all wages in excess of $200,000 ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return).

For 2022, the self-employment tax imposed on self-employed people is:

12.4% OASDI on the first $147,000 of self-employment income, for a maximum tax of $18,228 (12.4% of $147,000); plus
2.90% Medicare tax on the first $200,000 of self-employment income ($250,000 of combined self-employment income on a joint return, $125,000 on a return of a married individual filing separately), plus
3.8% (2.90% regular Medicare tax plus 0.9% additional Medicare tax) on all self-employment income in excess of $200,000 ($250,000 of combined self-employment income on a joint return, $125,000 for married taxpayers filing a separate return).

More than one employer

What happens if an employee works for your business and has a second job? That employee would have taxes withheld from two different employers. Can the employee ask you to stop withholding Social Security tax once he or she reaches the wage base threshold? Unfortunately, no. Each employer must withhold Social Security taxes from the individual’s wages, even if the combined withholding exceeds the maximum amount that can be imposed for the year. Fortunately, the employee will get a credit on his or her tax return for any excess withheld.

We can help

Business Start-Up Costs — What’s Deductible?

October 20, 2021 by Admin

Rikard & Neal QuickBooks Launching a new business takes hard work — and money. Costs for market surveys, travel to line up potential distributors and suppliers, advertising, hiring employees, training, and other expenses incurred before a business is officially launched can add up to a substantial amount.

The tax law places certain limitations on tax deductions for start-up expenses.

No deduction is available until the business becomes active.
Up to $5,000 of accumulated start-up expenses may be deducted in the tax year in which the active business begins. This $5,000 limit is reduced (but not below zero) by the excess of total start-up costs over $50,000.
Any remaining start-up expenses may be deducted ratably over the 180-month period beginning with the month in which the active business begins.

Example: Gina spent $20,000 on start-up costs before her new business began on July 1, 2020. In the 2020 tax year, she may deduct $5,000 and the portion of the remaining $15,000 allocable to July through December of 2020 ($15,000/180 × 6 = $500), a total of $5,500. The remaining $14,500 may be deducted ratably over the remaining 174 months.

Instead of deducting start-up costs, a business may elect to capitalize them (treat them as an asset on the balance sheet). Deductions for “organization expenses” — such as legal and accounting fees for services related to forming a corporation or partnership — are subject to similar rules.

Call us at 901-685-9411 and request a free initial consultation to learn more.

2021 Q4 tax calendar: Key deadlines for businesses and other employers

October 5, 2021 by Rikard Neal

2021 Q4 tax calendar: Key deadlines for businesses and other employers

Here are some of the key tax-related deadlines affecting businesses and other employers during the fourth quarter of 2021. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

Note: Certain tax-filing and tax-payment deadlines may be postponed for taxpayers who reside in or have a business in federally declared disaster areas.

Friday, October 15

If a calendar-year C corporation that filed an automatic six-month extension:

File a 2020 income tax return (Form 1120) and pay any tax, interest and penalties due.
Make contributions for 2020 to certain employer-sponsored retirement plans.

Monday, November 1

Report income tax withholding and FICA taxes for third quarter 2021 (Form 941) and pay any tax due. (See exception below under “November 10.”)

Wednesday, November 10

Report income tax withholding and FICA taxes for third quarter 2021 (Form 941), if you deposited on time (and in full) all of the associated taxes due.

Wednesday, December 15

If a calendar-year C corporation, pay the fourth installment of 2021 estimated income taxes.

Friday, December 31

Establish a retirement plan for 2021 (generally other than a SIMPLE, a Safe-Harbor 401(k) or a SEP).

Contact us if you’d like more information about the filing requirements and to ensure you’re meeting all applicable deadlines.
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