Converting a traditional IRA to a Roth IRA can provide tax-free growth and the ability to withdraw funds tax-free in retirement. But what if you convert a traditional IRA — subject to income taxes on all earnings and deductible contributions — and then discover that you would have been better off if you hadn’t converted it? Fortunately, it’s possible to undo a Roth IRA conversion, using a “recharacterization.”
Reasons to recharacterize
There are several possible reasons to undo a Roth IRA conversion.
Tax extension deadlines are approaching fast for returns with a calendar year end.
Individuals 1040 – 10/15/17
Partnerships 1106 – 09/15/17
S-Corp 1120S – 09/15/17
Corporation 1120 – 10/15/17
Trusts 1041 –
If your business is a limited liability company (LLC) or a limited liability partnership (LLP), you know that these structures offer liability protection and flexibility as well as tax advantages. But they once also had a significant tax disadvantage: The IRS used to treat all LLC and LLP owners as limited partners for purposes of the passive activity loss (PAL) rules, which can result in negative tax consequences. Fortunately, these days LLC and LLP owners can be treated as general partners,
Your not-for-profit has probably spent a lot of time and effort attracting board members who have the knowledge, enthusiasm and commitment to make a difference to your organization. Unfortunately, what begins as a good relationship can sour over time, and you may find yourself in the tough position of having to “fire” a board member.
8 deadly sins
Several behaviors can interfere with your board’s efficacy. Pay particular attention to members who:
Most of the talk about possible tax legislation this year has focused on either wide-sweeping tax reform or taxes that are part of the Affordable Care Act. But there are a few other potential tax developments for individuals to keep an eye on.
Back in December of 2015, Congress passed the PATH Act, which made a multitude of tax breaks permanent. However, there were a few valuable breaks for individuals that it extended only through 2016.
Unemployment tax rates for employers vary from state to state. Your unemployment tax bill may be influenced by the number of former employees who’ve filed unemployment claims with the state, your current number of employees and your business’s age. Typically, the more claims made against a business, the higher the unemployment tax bill.
Here are six ways to control your unemployment tax costs:
1. Buy down your unemployment tax rate if your state permits it.
More and more not-for-profits are joining forces to better serve their clients and cut costs. But such relationships can come with complicated financial reporting obligations.
Starting with the simplest
For accounting purposes, the simplest relationship between nonprofits may be a collaborative arrangement. These are typically contractual agreements in which two or more organizations are active participants in a joint operating activity — for example, a hospital that’s jointly operated by two nonprofit health care organizations.
Now that Affordable Care Act (ACA) repeal and replacement efforts appear to have collapsed, at least for the time being, it’s a good time for a refresher on the tax penalty the ACA imposes on individuals who fail to have “minimum essential” health insurance coverage for any month of the year. This requirement is commonly called the “individual mandate.”
Before we review how the penalty is calculated,
With an employee stock ownership plan (ESOP), employee participants take part ownership of the business through a retirement savings arrangement. Meanwhile, the business and its existing owner(s) can benefit from some potential tax breaks, an extra-motivated workforce and potentially a smoother path for succession planning.
How ESOPs work
To implement an ESOP, you establish a trust fund and either:
- Contribute shares of stock or money to buy the stock (an “unleveraged” ESOP),