Plan now to take Advantage of Health FSAs in 2017

FSAs provide employees a way to use tax-free dollars to pay medical expenses not covered by other health plans. Because eligible employees need to decide how much to contribute through payroll deductions before the plan year begins, now is when many employers are offering employees the option to participate during the 2017 plan year.

Interested employees who wish to contribute to an FSA during the new year must make this choice again for 2017, even if they contributed in 2016. Self-employed individuals are not eligible.

An employee who chooses to participate can contribute up to $2,600 during the 2017 plan year (up from $2,550 in 2016). Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax. If the plan allows, the employer may also contribute to an employee’s FSA. Read more

Retirement Contributions Limits Announced for 2017

Cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2017 have been announced by the IRS. Here are the highlights:

In general, income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the saver’s credit all increased for 2017. Contribution limits for SIMPLE retirement accounts for self-employed persons remains unchanged at $12,500.

Traditional IRAs

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions; however, if during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply. Here are the phase-out ranges for 2017:

• For single taxpayers covered by a workplace retirement plan, the phase-out range is $62,000 to $72,000, up from $61,000 to $71,000.
• For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $99,000 to $119,000, up from $98,000 to $118,000.
• For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $186,000 and $196,000, up from $184,000 and $194,000.
• For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

Read more

Cash Flow Management: the Secret to Success

Cash flow is the lifeblood of any small business. Some business experts even say that a healthy cash flow is more important than your business’s ability to deliver its goods and services.

While that might seem counter intuitive, consider this: if you fail to satisfy a customer and lose that customer’s business, you can always work harder to please the next customer. If you fail to have enough cash to pay your suppliers, creditors, or employees, you are out of business! Read more

Apps for Tracking Business Mileage

Every business owner, no matter how small, must keep good records. But whether it’s keeping track of mileage, documenting expenses, or separating personal from business use, keeping up with paperwork is a seemingly never ending job.

No matter how good your intentions are in January, the chances are good that by summer that mileage log is looking a bit empty. Even worse, you could be avoiding tracking your mileage altogether–and missing out on tax deductions and credits that could save your business money at tax time.

The good news is that there are a number of phone applications (apps) that could help you track those pesky business miles. Most of these apps are useful for tracking and reporting expenses, mileage and billable time. They use GPS to track mileage, allow you to track receipts, choose the mileage type (Business, Charitable, Medical, Moving, Personal), and produce formatted reports (IRS compliant HTML and CSV tax return reports) that are easy to generate and share with your CPA, EA, or tax advisor. Read more

Keep Track of Miscellaneous Deductions

Miscellaneous deductions such as certain work-related expenses you paid for as an employee can reduce your tax bill, but you must itemize deductions when you file to claim these costs. Many taxpayers claim the standard deduction, but you might pay less tax if you itemize.

Here are some tax tips that may help you reduce your taxes:

Deductions Subject to the Two Percent Limit. You can deduct most miscellaneous costs only if their sum is more than two percent of your adjusted gross income (AGI). These include expenses such as:

• Unreimbursed employee expenses.
• Job search costs for a new job in the same line of work.
• Work clothes and uniforms required for your job, but not suitable for everyday use.
• Tools for your job.
• Union dues.
• Work-related travel and transportation.
• The cost you paid to prepare your tax return. These fees include the cost you paid for tax preparation software. They also include any fee you paid for e-filing of your return. Read more