Stonehenge Blog — Stonehenge Consulting, PLC

State Of Michigan - Estimated Tax Payments

State Of Michigan - Estimated Tax Payments

The Michigan Dept. of Treasury will provide an automatic waiver of all penalty and interest related to estimated taxes owed by taxpayers who received unemployment benefits during tax year 2020. Estimated tax payments generally aren’t required because sufficient tax is required to be withheld on income earned by the taxpayer. The receipt of unemployment benefits (a source of income not subject to mandatory tax withholding) therefore presents an estimated tax payment obligation not anticipated by many individuals when 2020 began. For those taxpayers, therefore, the department is waiving penalty and interest related to the requirement to pay quarterly estimated tax payments.

Nikki DaleyMarch 9, 2021Tax Planning

PPP adjusted to prioritize very small businesses

PPP adjusted to prioritize very small businesses

When the Small Business Administration (SBA) launched the Paycheck Protection Program (PPP) last year, the program’s stated objective was “to provide a direct incentive for small businesses to keep their workers on the payroll.” However, according to federal officials, the recently issued second round of funding has distributed only a small percentage of the $15 billion set aside for small businesses and low- to moderate-income “first-draw” borrowers.

Nikki DaleyMarch 9, 2021PPP Loan, COVID-19, Business

Retiring soon? Recent law changes may have an impact on your retirement savings

Retiring soon? Recent law changes may have an impact on your retirement savings

If you’re approaching retirement, you probably want to ensure the money you’ve saved in retirement plans lasts as long as possible. If so, be aware that a law was recently enacted that makes significant changes to retirement accounts. The SECURE Act, which was signed into law in late 2019, made a number of changes of interest to those nearing retirement.

Nikki DaleyMarch 1, 2021SECURE Act, Retirement, Tax Planning

Didn’t contribute to an IRA last year? There still may be time

Didn’t contribute to an IRA last year? There still may be time

If you’re getting ready to file your 2020 tax return, and your tax bill is higher than you’d like, there might still be an opportunity to lower it. If you qualify, you can make a deductible contribution to a traditional IRA right up until the April 15, 2021 filing date and benefit from the tax savings on your 2020 return.

Nikki DaleyMarch 1, 2021Tax Planning

Should your business add Roth contributions to its 401(k)?

Should your business add Roth contributions to its 401(k)?

If your business sponsors a 401(k) plan, you might someday consider adding designated Roth contributions. Here are some factors to explore when deciding whether such a feature would make sense for your company and its employees.

Key differences

Roth contributions differ from other elective deferrals in two key tax respects. First, they’re irrevocably designated to be made on an after-tax basis, rather than pretax. Second, if all applicable requirements are met and the distribution constitutes a “qualified distribution,” the earnings won’t be subject to federal income tax when distributed.

Nikki DaleyMarch 1, 2021Business

Work Opportunity Tax Credit extended through 2025

Work Opportunity Tax Credit extended through 2025

Are you a business owner thinking about hiring? Be aware that a recent law extended a credit for hiring individuals from one or more targeted groups. Employers can qualify for a tax credit known as the Work Opportunity Tax Credit (WOTC) that’s worth as much as $2,400 for each eligible employee ($4,800, $5,600 and $9,600 for certain veterans and $9,000 for “long-term family assistance recipients”). The credit is generally limited to eligible employees who began work for the employer before January 1, 2026.

Nikki DaleyMarch 1, 2021Employers

PPP revisions target smallest businesses

PPP revisions target smallest businesses

The Biden administration has announced several reforms to the popular Paycheck Protection Program (PPP) to bring greater relief to the smallest and most vulnerable businesses. Among other things, the administration is imposing a two-week moratorium on loans to companies with 20 or more employees and focusing on smaller businesses. It’s also changing several program rules to expand eligibility for the 100% forgivable PPP loans.

Nikki DaleyMarch 1, 2021PPP Loan

Now or later: When’s the right time to transfer your wealth?

Now or later: When’s the right time to transfer your wealth?

To gift or not to gift? It’s a deceptively complex question. The temporary doubling of the federal gift and estate tax exemption — to an inflation-adjusted $11.7 million in 2021 — is viewed by some people as a “use it or lose it” proposition. In other words, you should make gifts now to take advantage of the exemption before it sunsets at the end of 2025 (or sooner if lawmakers decide to reduce it earlier).

But giving away wealth now isn’t right for everyone. Depending on your circumstances, there may be tax advantages to keeping assets in your estate. Here are some of the factors to consider.

Nikki DaleyFebruary 16, 2021Estate Planning, Estates

Consider your options when addressing life insurance in your estate plan

Consider your options when addressing life insurance in your estate plan

Life insurance has long provided a source of liquidity to pay estate taxes and other expenses. Even though for many families, federal and state estate taxes aren’t a concern, life insurance continues to offer many benefits for these nontaxable estates. For this reason, it’s important to properly account for your life insurance policies in your estate plan.

Nikki DaleyFebruary 16, 2021Estates

2021 adjusted penalties for health benefits and other employer plans

2021 adjusted penalties for health benefits and other employer plans

The U.S. Department of Labor (DOL) recently announced the 2021 annual adjustments to civil monetary penalties for a wide range of benefits-related violations. Legislation enacted in 2015 requires annual adjustments to certain penalty amounts by January 15 of each year. The 2021 adjustments are effective for penalties assessed after January 15, 2021, with respect to violations occurring after November 2, 2015. Here are some highlights:

Nikki DaleyFebruary 16, 2021Employers

The power of the tax credit for buying an electric vehicle

The power of the tax credit for buying an electric vehicle

Although electric vehicles (or EVs) are a small percentage of the cars on the road today, they’re increasing in popularity all the time. And if you buy one, you may be eligible for a federal tax break.

The tax code provides a credit to purchasers of qualifying plug-in electric drive motor vehicles including passenger vehicles and light trucks. The credit is equal to $2,500 plus an additional amount, based on battery capacity, that can’t exceed $5,000. Therefore, the maximum credit allowed for a qualifying EV is $7,500.

Nikki DaleyFebruary 16, 2021Taxes, Tax Planning

Did you make donations in 2020? There’s still time to get substantiation

Did you make donations in 2020? There’s still time to get substantiation

If you’re like many Americans, letters from your favorite charities may be appearing in your mailbox acknowledging your 2020 donations. But what happens if you haven’t received such a letter — can you still claim a deduction for the gift on your 2020 income tax return? It depends.

Nikki DaleyFebruary 16, 2021Tax Planning, Taxes

Many tax amounts affecting businesses have increased for 2021

Many tax amounts affecting businesses have increased for 2021

A number of tax-related limits that affect businesses are annually indexed for inflation, and many have increased for 2021. Some stayed the same due to low inflation. And the deduction for business meals has doubled for this year after a new law was enacted at the end of 2020. Here’s a rundown of those that may be important to you and your business.

Nikki DaleyFebruary 10, 2021Business, Tax Planning

Blockchain beckons businesses … still

Blockchain beckons businesses … still

The term and concept known as “blockchain” is hardly new. This technology surfaced more than a decade ago. Bitcoin, the relatively well-known form of cryptocurrency, has gotten much more attention than blockchain itself, which is the platform on which Bitcoin is exchanged.

One might be tempted to think that, having spent so many years in the shadows, blockchain has missed its opportunity to become widely accepted by businesses. Yet its promise persists, and you’d be well-advised to keep an eye on when blockchain might begin to make further inroads into your industry — if it hasn’t already.

Nikki DaleyFebruary 10, 2021Business

2021 individual taxes: Answers to your questions about limits

2021 individual taxes: Answers to your questions about limits

Many people are more concerned about their 2020 tax bills right now than they are about their 2021 tax situations. That’s understandable because your 2020 individual tax return is due to be filed in less than three months (unless you file an extension).

However, it’s a good idea to acquaint yourself with tax amounts that may have changed for 2021. Below are some Q&As about tax amounts for this year.

Nikki DaleyFebruary 10, 2021Tax Planning, Taxes