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President Joe Biden and Vice President Kamala Harris deliver remarks about healthcare in Raleigh, North Carolina on March 26, 2024. While both couples made extra tax payments, they each incurred a small estimated tax penalty, based on underpayments from each quarterly deadline and interest. Tax planning for self-employment incomeOver the years, the Bidens have reduced self-employment taxes by receiving some wages through their companies, which are structured as S corporations. After paying "reasonable compensation" to shareholders, S corporation owners can take distributions without paying 15.3% for Social Security and Medicare taxes. Work with a tax professionalTypically, filers get a tax refund when they overpay levies throughout the year.
Persons: Joe Biden, Kamala Harris, Peter Zay, David, Harris, Catherine Valega, filers Organizations: Anadolu, Getty, Eisner Advisory, Social Security, Boston, Bee Advisory Locations: Raleigh , North Carolina, New York
A cottage industry of specialist firms has sprung up to help business owners claim the Employee Retention Credit (ERC), a governmental tax incentive intended for companies stressed by the pandemic. To be sure, the IRS warned business owners last October to be on the lookout for third parties promoting improper ERC claims. The IRS went so far as to add fraudulent claims involving the ERC to its annual "Dirty Dozen" list of tax scams. Start by understanding the basic ERC claim requirementsStart by knowing the basics so you can understand whether your business may qualify for a credit. Another red flag is when a third party doesn't ask for documentation to ensure a business owner qualifies, Perrone said.
Persons: Donald N, Hoffman, Danny Werfel, Gina Perrone, Sax, Jenn McCabe, Perrone Organizations: ERC —, Eisner Advisory, IRS, ERC, CPA, Small Business Administration, Armanino
Many small business owners have trouble figuring out an appropriate take-home pay as the company expands, and some don’t pay themselves at all. Understanding how to pay yourself appropriately — even if it’s only a small amount that grows over time — is important for the long-term health of a business, according to professionals that advise small businesses. “It doesn’t reflect the true health of your business if you aren’t taking something,” said Zahir Khoja, chief executive at Wave Financial, a provider of money management tools for small businessesThe mechanics are especially important given that 26% of small business owners don’t pay themselves a salary, according to a 2022 small business survey from Wave. Here are four tips small business owners should consider when setting their take-home pay. Business owners may think the money could be better spent on hiring marketing help, redoing the website or some other expense that can help the company expand.
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