Grigg, Bratton & Brash, P.C.

03/01/2021

Although electric vehicles are a small percentage of the cars on the road today, they’re increasing in popularity. 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 cars 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 is $7,500. There are a number of requirements to qualify and the credit may not be available because of a per-manufacturer cumulative sales limitation. (Tesla and GM vehicles are no longer eligible.) Contact us if you want more information.

02/24/2021

A number of tax-related limits affecting businesses are annually indexed for inflation, and many have increased for 2021. For example, the Section 179 expensing limit has gone up to $1.05 million from $1.04 million for 2020. Health Savings Account (HSA) contributions for individual coverage have increased to $3,600 (from $3,550). HSA family coverage contributions increased $100 to $7,200. Some 2021 amounts have stayed the same due to low inflation. This includes employee contributions to 401(k) plans, which remain $19,500. And the deduction for business-related meals and beverages doubled from 50% to 100% due to a new law. We can answer any questions you have about taxes and your business.

02/22/2021

It’s understandable if you’re more concerned about your 2020 tax bill than you are about your 2021 tax situation. That’s because your 2020 individual tax return is due to be filed in less than 3 months. However, it’s a good idea to familiarize yourself with tax amounts for this year. For example, the amount you have to earn in 2021 before you can stop paying Social Security on your salary has increased to $142,800 (from $137,700 for 2020). For 2021, you can contribute up to $19,500 (unchanged from 2020) to a 401(k) plan. You can contribute another $6,500 catch-up amount to a 401(k) if you’re age 50 or older. Contact us if you have questions or need more information.

02/19/2021

A lower IRS mileage rate means smaller tax deductions for business miles for 2021. The optional cents-per-mile rate used to calculate the deductible costs of operating an auto for business has decreased by one-and-one-half cents to 56 cents per mile. It was 57.5 cents for 2020 and 58 cents for 2019. The rate partially reflects the current cost of gas, which is down from a year ago. This mileage rate is useful if you don’t want to keep track of actual vehicle-related expenses. But you still must record certain information, such as the mileage, date and destination for each trip. The mileage rate can also be used for reimbursing employees. Many rules and limits apply. Contact us for details.

02/17/2021

Merger and acquisition activity in many sectors slowed during 2020 due to COVID-19. But analysts expect it to improve in 2021 as the country comes out of the pandemic. If you’re considering buying or selling another business, it’s important to understand the tax implications. For tax purposes, a transaction can basically be structured in two ways: stock (or ownership interest) or assets. For tax and nontax reasons, buyers usually prefer to purchase assets, while sellers generally prefer stock sales. Buying or selling a business may be the largest transaction you’ll ever make, so seek professional tax advice. After a deal is done, it may be too late to get the best tax results. Contact us.

02/16/2021

The IRS is opening the 2020 individual income tax return filing season on Feb. 12. (This is later than in the past because of a law that was recently enacted.) Even if you usually don’t file until closer to the April 15 deadline (or you file an extension), consider filing early. It can potentially protect you from tax identity theft. In these scams, a thief uses another person’s personal information to file a fraudulent return early in the filing season and claim a bogus refund. Another benefit of early filing is that if you’re getting a refund, you’ll get it faster. And if you were eligible for an Economic Impact Payment last year and didn’t receive it, you can claim it on your 2020 return.

02/16/2021

To claim a deduction for a donation of $250 or more, you generally need a contemporaneous written acknowledgment from the charity. “Contemporaneous” means the earlier of the date you file your income tax return, or the extended due date of your return. If you made a donation in 2020 but don’t have a written acknowledgment, you can request it from the charity and wait to file your 2020 return until you receive it. Additional rules apply to certain types of donations. Keep in mind that under a 2020 law, taxpayers who don’t itemize deductions can claim a federal income tax write-off for up to $300 of cash contributions to IRS-approved charities for the 2020 tax year.

12/31/2020

12/25/2020

Merry Christmas everyone!

12/23/2020

Business owners know employee health care benefits are expensive. Therefore, your business may want to provide some of these benefits through an employer-sponsored Health Savings Account (HSA). For eligible individuals, HSAs are a tax-advantaged way to set aside funds (or have their employers do so) to meet future medical needs. An eligible employee must be covered by a “high deductible health plan.” For 2020 and 2021, a high deductible health plan has an annual deductible of at least $1,400 for self-only coverage, or $2,800 for family coverage. For 2020, an individual can contribute $3,550 in ($7,100 for a family) to an HSA. This is increasing to $3,600 and $7,200, respectively, for 2021.

12/21/2020

Are you thinking about selling stock at a loss to offset gains that have been realized during 2020? If so, it’s important not to run afoul of the “wash sale” rule. Under this rule, if you sell stock or securities for a loss and buy substantially identical stock or securities back within the 30-day period before or after the sale date, the loss can’t be claimed for tax purposes. The rule is designed to prevent taxpayers from using the tax benefit of a loss without parting with ownership in a significant way. Note that the rule applies to a 30-day period before or after the sale date to prevent “buying the stock back” before it’s even sold. We can answer any questions you may have.