Improve Cash Flow and Prepare for Retirement in Our July Newsletter!

JULY 2021 E-NEWSLETTER

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July Featured News

Paying Yourself as a Business Owner

Owning a business is challenging and hard work, so you’ll want to compensate yourself appropriately. How you do that depends on the structure of your business.

Tax Diversification in Retirement Planning

In the same way that you diversify your investments, you’ll want tax diversification too to minimize the total amount of taxes you’ll pay in retirement.

Managing Inflation Risk During Your Retirement

Longer retirements mean inflation can put a serious dent in the best-laid plans.

Control Cash Flow and Costs with Just-In-Time Inventory Management

Holding small amounts of inventory with a Just-In-Time (JIT) inventory system can improve cash flow and create operating efficiencies.

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Losses and Your Rental Property

The general rule is that rental activity is passive, which limits the amount of losses you can claim on your tax return.

July 2021 Client Profile

My business is located in Michigan, but I’m considering hiring remote employees who live in other states. How will this impact my payroll taxes?

July 2021 Q & A

Q: Are cash or point rewards I earn from my credit card taxable?

A: The general rule is no, because the IRS reviews these as discounts on purchases you make. This is true whether you receive cashback, statement credits or airline miles.

There are exceptions. For example, if you receive a cash or points bonus simply by opening an account, it’s taxable if there are no spending requirements attached.

Keep in mind that these rules also apply to bank accounts. If your bank gives you $500 for opening a savings account but doesn’t attach any spending requirements, generally this will be considered taxable income.

Q: My business needs to buy some new machinery. Which is better for taxes – leasing or purchasing?

A: When you lease equipment for your business, generally you can deduct the lease payments as rent. But you’ll need to make sure the lease isn’t a disguised installment or conditional sale agreement, which would mean accounting for it as a purchase.

Purchasing equipment generally means you’ll recover the cost through annual depreciation. This spreads the cost across the equipment’s useful life. But now, through December 31, 2022, purchasing certain equipment will allow you to write off the entire cost in the year you start using the equipment.

SHORT BITS

INCREASED DONATIONS FROM DONOR-ADVISED FUNDS

According to the National Philanthropic Trust, charitable giving through donor-advised funds increased in 2020. The first half of 2020 saw a 78% increase in giving to human services organizations compared to 2019. And international charities, environmental and animal welfare groups, and educational institutions saw increases of 42 percent, 31 percent and 11 percent, respectively.

CLOSING TIME

The IRS is closing ten lockbox addresses in San Francisco, CA and Hartford, CT that taxpayers use to make payments. The ten boxes are all associated with Bank of America and will cease operations on January 1, 2022. The post office will forward mail to new addresses in Louisville, KY and Cincinnati, OH through 2021. Starting January 1, 2022, payments sent to the closed addresses will be returned to the sender.