Tax Pro Plus
2999 Overland Ave.
Suite 204
Los Angeles, CA 90064
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Ph: (310) 827-4829
Fax: (310) 842-7160
info@taxproplus-la.com
- Know the Rules before You Break Open Your Retirement Piggy Bank
- If you are looking for cash for a specific purpose, your retirement piggy bank may be a tempting source. However, if you are under age 59½ and plan to withdraw money from your Traditional IRA or qualified retirement account, you will likely pay both income tax and a 10% early distribution tax (also referred to as a penalty) on any previously untaxed money that you take out. Withdrawals from a Simple IRA before you are age 59½ and during the “2-year period” may be subject to a 25% additional early distribution tax instead of 10%. The 2-year period is measured from the first day that contributions are deposited. These penalty rates are what you'd pay on your federal return; your state may also charge an early withdrawal penalty in addition to regular state income tax.
- Misclassifying Workers Can Be Costly!
- Most business owners and executives tend to be financially conservative and preserve the cash of the business. This conservative approach frequently carries over to hiring activities, with many employers choosing to hire independent contractors/freelancers as opposed to full-time employees. In doing so, they eliminate the cost of company benefits such as vacation, sick pay, health insurance and retirement funding. Another big benefit is eliminating the employer’s matching share of Social Security and Medicare payroll taxes, not to mention the savings on unemployment taxes and worker’s compensation insurance.
- Tax Tips for the Well-traveled Businessperson
- Food and lodging expenses are generally deductible when away from home for business purposes. This may be particularly beneficial for self-employed individuals who travel extensively. Like everything involving taxes, there are rules to follow.
- Reap the Tax Benefits of Education Planning
- The tax code includes a number of incentives that, with proper planning, can provide tax benefits while you, your spouse, or your children are being educated.
- Beware of Trust Fund Penalties
- The term “trust fund recovery penalty” refers to a tax penalty assessed against the directors or officers of a business entity that failed to pay a required tax on behalf of its employees. For example, employers withhold income taxes and FICA payroll taxes from employees’ wages. These funds actually belong to the government and are referred to as “trust funds.” They cannot be used by the employer to pay other business expenses.
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