Tax-Free – DougFreemanCPA.com

Education benefits help attract, retain and motivate your employees

One popular fringe benefit is an education assistance program that allows employees to continue learning and perhaps earn a degree with financial assistance from their employers. One way to attract, retain and motivate employees is to provide education fringe benefits so that team members can improve their skills and gain additional knowledge. An employee can […]

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Awarded money in a lawsuit or settlement? It’s only tax-free in certain circumstances

Antidiscrimination Laws, Federal Income Tax, Small Business, Small Business Owners, Small Business Tax Tips / Douglas Freeman

You generally must pay federal tax on all income you receive but there are some exceptions when you can exclude it. For example, compensatory awards and judgments for “personal physical injuries or physical sickness” are free from federal income tax under the tax code. This includes amounts received in a lawsuit or a settlement and

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Choosing a business entity? Here are the pros and cons of a C corporation

C Corporations, Compensation and Benefits, Employee Benefits, Federal Income Tax, Income Tax, Small Business, Small Business Owners / Douglas Freeman

If you’re launching a new business venture, you’re probably wondering which form of business is most suitable. Here is a summary of the major advantages and disadvantages of doing business as a C corporation. A C corporation allows the business to be treated and taxed as a separate entity from you as the principal owner.

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Investing in the future with a 529 education plan

529 Saving Plan, Prepaid Tuition Plans, Qualified Tuition Program / Douglas Freeman

If you have a child or grandchild who’s going to attend college in the future, you’ve probably heard about qualified tuition programs, also known as 529 plans. These plans, named for the Internal Revenue Code section that provides for them, allow prepayment of higher education costs on a tax-favored basis. There are two types of

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Are you ready for the 2021 gift tax return deadline?

2021 Tax Return, Charitable, Federal Taxes, Gift Tax / Douglas Freeman

If you made large gifts to your children, grandchildren, or other heirs last year, it’s important to determine whether you’re required to file a 2021 gift tax return. And in some cases, even if it’s not required to file one, it may be beneficial to do so anyway. Who must file? The annual gift tax

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Married couples filing separate tax returns: Why would they do it?

2021 Tax Return, Adoption, American Opportunity Tax Credit (AOTC), Child Tax Credit, Federal Income Tax, Income Tax, Individual Income Tax, IRA, Lifetime Learaning Credit (LLC), Social Security, Tax Return / Douglas Freeman

If you’re married, you may wonder whether you should file joint or separate tax returns. The answer depends on your individual tax situation. In general, it depends on which filing status results in the lowest tax. But keep in mind that, if you and your spouse file a joint return, each of you is “jointly

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Making withdrawals from your closely held corporation that aren’t taxed as dividends

Business Loans, Closely Held Corporations, Compensation, Corporations, Debt-to-equity Ratio, Dividend Distribution / Douglas Freeman

Do you want to withdraw cash from your closely held corporation at a minimum tax cost? The simplest way is to distribute cash as a dividend. However, a dividend distribution isn’t tax-efficient since it’s taxable to you to the extent of your corporation’s “earnings and profits.” It’s also not deductible by the corporation. Five alternatives.

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Thinking about participating in your employer’s 401(k) plan? Here’s how it works

401K, Contributions, Employee Benefits, Employees, IRA, Retirement, Roth IRA, Small Business, Tax, Tax Planning / Douglas Freeman

Employers offer 401(k) plans for many reasons, including attracting and retaining talent. These plans help an employee accumulate a retirement nest egg on a tax-advantaged basis. If you’re thinking about participating in a plan at work, here are some of the features. Under a 401(k) plan, you have the option of setting aside a certain

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Selling a home: Will you owe tax on the profit?

(NIIT) Net Investment Income Tax, Capital Gains, Home Mortgage, Modified Adjusted Gross Income (MAGI), Tax Record Retention, Vacation Rental / Douglas Freeman

Many homeowners across the country have seen their home values increase recently. According to the National Association of Realtors, the median price of homes sold in July of 2021 rose 17.8% over July of 2020. The median home price was $411,200 in the Northeast, $275,300 in the Midwest, $305,200 in the South and $508,300 in

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Getting a divorce? Be aware of tax implications if you own a business

Assets, Divorce, Federal Income Tax, Federal Taxes, Gift and Estate Tax, Small Business / Douglas Freeman

If you’re a business owner and you’re getting a divorce, tax issues can complicate matters. Your business ownership interest is one of your biggest personal assets and in many cases, your marital property will include all or part of it. Tax-free property transfers. You can generally divide most assets, including cash and business ownership interests,

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