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iras-and-rmds-answering-your-faqs

IRAs and RMDs: Answering Your FAQs
IRAs and RMDs: Answering Your FAQs 1600 941 smolinlupinco

You may be aware of the fact that you can’t let funds sit in your traditional IRA indefinitely. Once you reach age 72, you’re required to start taking withdrawals. 

You may also be aware that the rules for taking required minimum distributions, or RMDs, are complex. Here are some answers to frequently asked questions about taking withdrawals from a traditional IRA (including SIMPLE IRA or SEP IRA). 

Can I withdraw money before retirement?

The simple answer: yes. 

That said, if you want to take money out of a traditional IRA before the age of 59.5, those distributions are taxable and you may be subject to a 10% penalty tax. 

That 10% penalty tax—but not regular income tax—can be avoided if you pay: 

  • Qualified higher education expenses
  • Up to $10,000 of expenses if you’re a first-time homebuyer
  • Health insurance premiums if you’re unemployed 

When can I take my first RMD for an IRA?

You must take your first RMD by April 1 of the year after the year in which you turn 72. Note that this rule applies whether or not you’re still employed. 

How do I determine my RMD? 

When calculating your RMD, take the account balance from the end of the preceding calendar year and divide it by the distribution period from the IRS’s Uniform Lifetime Table. 

If the sole beneficiary is a spouse who is 10 or more years younger than the owner, a separate table will be used. 

What if I have multiple accounts? 

For those with more than one IRA, the RMD for each must be calculated separately each year. 

However, you don’t have to take a separate RMD from each IRA—you may combine the RMD amounts for all IRAs, and either withdraw the total from one IRA or a portion from each. 

Can I withdraw amounts exceeding my RMD? 

Yes—you can always withdraw more than your RMD. Note, however, that you cannot put excess withdrawals toward RMDs in future years. 

When planning for RMDs, weigh your income needs against the ability to maintain the IRA tax shelter for as long as possible. 

Can I withdraw more than once a year? 

Yes. As long as you withdraw the total annual minimum amount by December 31 (or, if it’s your first RMD, April 1), you may withdraw your yearly RMD in any number of distributions throughout the year.

What if I don’t take an RMD? 

If your distributions for any given year are less than your RMD, you’ll be subject to an additional tax. This tax is equal to 50% of the amount that was not paid out but should have been. 

Plan ahead with us

Questions about your retirement planning? Our knowledgeable tax advisors can help. Contact us to learn more. 

pros-and-cons-of-c-corporations-for-business-entities

Pros and Cons of C Corporations for Business Entities
Pros and Cons of C Corporations for Business Entities 1275 750 smolinlupinco

If you’re launching a new business venture, you may find yourself wondering which type of company to create—and more specifically, whether a C corporation is the right option for you given your unique situation and goals. There are many advantages and disadvantages of doing business as a C corporation that are important to consider. 

What is a C corporation?

As a C corporation, your business is treated and taxed separately from you as its principal owner (unlike with an LLC). This protects you from the debts of business while also allowing you to control day-to-day operations and corporate acts like redemptions, acquisitions, and liquidations. 

As an added perk, the corporate tax rate is currently 21%—lower than the highest non-corporate tax rate. 

How to ensure your corporation is treated as a separate entity

For your business to be treated and taxed separately from you as an individual, you must follow the legal requirements of your state. For example: 

  • Filing articles of incorporation
  • Adopting bylaws
  • Electing a board of directors
  • Holding organizational meetings
  • Keeping meeting minutes

Compliance with these requirements, along with the maintenance of an adequate capital structure, will keep you from risking personal liability for business debts.

Pros and cons of C corporations 

If you’re unsure whether a C corporation is the right legal structure for your business, it’s important to explore both sides of this model. 

Advantages

On a tax-favored basis, a C corporation can be used to provide fringe benefits and fund qualified pension plans. While subject to certain limitations, the corporation can deduct various benefit costs (such as health insurance and group life insurance) without negative tax consequences. 

When it comes to raising capital from outside investors, a C corporation also offers significant flexibility—it can have multiple classes of stock, each with different rights and preferences that can be tailored to the needs of an individual along with potential investors. For those who decide to raise capital through debt, interest paid by the corporation is deductible. 

Disadvantages

Since it’s taxed as a separate entity, all of the corporation’s items of income, credit, loss, and deduction are calculated at the entity level, arriving at taxable corporate profit or loss. This means that, for new businesses, one potential disadvantage of a C-corp is that losses can be trapped at the entity level and not deducted by owners (unless they expect to generate profits in the first year). 

Another potential disadvantage is that C corporation earnings can be subject to double taxation: once at the corporate level, and again when distributed to you. That said, this risk is minimal, since most corporate earnings will be attributed to your efforts as an employee and the corporation can deduct all reasonable salary paid to you. 

Not sure if a C corporation is the right choice? Contact us.

While a C corporation might be the appropriate choice at this time, you may be able to apply to become an S corporation in the future if it’s more appropriate for your business. 

If you have any questions or would like assistance exploring the best type of legal structure for your business, our knowledgeable advisors can help. Contact us to learn more. 

5-tips-to-prepare-for-year-end-inventory-counts

5 Tips to Prepare for Year-End Inventory Counts
5 Tips to Prepare for Year-End Inventory Counts 1600 941 smolinlupinco

The end of the year is approaching fast. For many, this means time for a physical year-end inventory count—the best way to ensure an accurate amount reported in your company’s perpetual inventory system.

Physical counts may seem tedious and time-consuming, but they can offer valuable insight into your company’s operational efficiency. Fortunately, there are some ways to streamline the process. 

Preparing for your inventory count

Follow the five tips listed below to increase the efficacy of your year-end inventory count. 

1. Use numbered inventory tags

Many companies use two-part tags to count their inventory: one to stay with the item on the shelf, and the other to be returned to the manager following the count. To ensure that the manager can account for every tag issued, use a tagging system to avoid double-counting or omitting items. 

The best way to do this is to number your tags sequentially—whether you order pre-numbered tags or create them yourself is up to you. Either way, you’ll want the tags to be numbered and ready to go well before the count is scheduled to begin. 

2. Preview your inventory

For an efficient inventory count, many companies do a test run a few days before the actual count. This helps to identify and correct any foreseeable problems (such as missing part numbers, unbagged supplies, and insufficient inventory tags). It also helps you determine how many workers to schedule for the project. 

3. Assemble counting teams

To avoid fraudulent counts, it’s helpful to assemble and assign teams to specific areas of the warehouse. (A map often helps workers identify count zones.) Additionally, avoid giving workers inventory listings to reference—encourage them to bring any possible discrepancies to attention rather than duplicating the amount from the listing. 

4. Write off unsaleable items 

If you already know that certain items are going to be written off, such as defective or obsolete items, be sure to dispose of them properly before the inventory count begins. 

5. Pre-count select items

If possible, take some time to pre-count items that aren’t expected to be used before year-end, complete with tagging and storing. If you notice a broken seal on the day of the actual count, those items should be recounted.

Value of inventory

Under the U.S. Generally Accepted Accounting Principles (GAAP), inventory is recorded at cost or market value—whichever is lower. That said, estimating the market value of inventory may require subjective judgment calls. It can be especially difficult to objectively assess the value of work-in-progress inventory, especially when it includes overhead allocations and percentage of completion assessments. 

Because the value of inventory is constantly fluctuating as work is performed and items are shipped and delivered, the best way to capture a static value is to “freeze” operations while the count takes place. This could involve counting inventory during off hours or breaking down counts by physical location. 

External auditors

If your company issues audited financial statements, at least one member of your external audit team will observe the physical inventory count. 

The auditor’s roles include: 

  • Observing procedures, including statistical sampling methods
  • Reviewing written inventory processes
  • Evaluating internal controls over inventory
  • Performing independent counts for comparison
  • Looking for obsolete, broken, or slow-moving items that should be written off

Be prepared to provide your auditors with invoices and shipping/receiving reports, which will be used to evaluate cutoff procedures and confirm reported values. 

Work with an advisor

If you’re concerned about your physical inventory counting procedures, our advisors can help you get it right, including investigating any discrepancies between your inventory count listing and the amount reported in your perpetual inventory system.

Contact us to get started. 

No Nanny? You May Still Be Liable for “Nanny Tax”
No Nanny? You May Still Be Liable for “Nanny Tax” 1600 941 smolinlupinco

If you’ve hired a house cleaner, gardener, or other household employee that isn’t an independent contractor, you may be liable for what’s called the “nanny tax”—even if you haven’t technically employed a nanny. 

You aren’t required to withhold federal income taxes when you hire a household worker, but you can choose to do so if requested by the worker (in which case, they must fill out a W-4 form). You may, however, be required to withhold Social Security and Medicare (FICA) taxes, along with paying federal unemployment (FUTA) tax.

In addition to federal income and other taxes, you may also be obligated to pay state taxes. 

Tax thresholds for 2022 and 2023

FICA taxes

If your household worker earns $2,400 or more in 2022 (not including food and lodging), you must withhold and pay FICA taxes. In 2023, this amount will increase to $2,600. Once you reach that threshold, note that all wages will be subject to FICA taxes—not just the excess. 

Note that you do not have to withhold these taxes for workers under the age of 18 whose primary occupation does not involve childcare, such as a part-time student babysitter.

Employers and household workers may each have FICA tax obligations—but as an employer, you are held responsible for withholding your worker’s FICA share while also paying a matching amount. 

FICA tax is divided between Social Security and Medicare, with the Social Security and Medicare tax rates being 6.2% and 1.45%, respectively, for both employers and workers. As an employer, you have the option to pay your worker’s share of wages for these tax purposes. That said, your payments will be treated as additional income for your worker’s federal taxes, so they will need to be included as wages on the W-2 form. 

FUCA taxes

If your household worker earns $1,000 or more in any calendar quarter (not including food and lodging), you must also pay FUTA tax. This tax applies to the first $7,000 of paid wages and is only to be paid by the employer. 

Paying your household worker taxes

To pay these household worker obligations, you will need to increase your quarterly estimated tax payments or increase withholdings from wages—as opposed to making an annual lump-sum payment. 

Unless you own your own business, you won’t have to file employment tax returns as the employer of a household worker, even if you’re required to withhold or pay tax. This is because employment taxes are reported on your tax return on Schedule H (Form 1040). 

In your tax return, include your employer identification number (EIN). If you don’t have one, you must file a Form SS-4 to get one. (Note that this is not the same as your Social Security number.)

If you own your business as a sole proprietor, however, you will include household worker taxes on the FUTA and FICA forms filed for your business using your sole proprietorship EIN.

Keep detailed records

Once you pay your taxes, be sure to keep all related records for at least four years following the due date of the return or the date the tax was paid—whichever is later. 

In your records, include the following:

  • Worker’s name
  • Address
  • Social Security number
  • Employment dates
  • Amount of wages paid
  • Amount of taxes withheld
  • Copies of any forms filed

If you need assistance understanding and applying tax rules to your situation, contact us to work with a knowledgeable tax advisor. 

end-of-year-tax-planning-for-individuals

End-of-Year Tax Planning for Individuals
End-of-Year Tax Planning for Individuals 1600 941 smolinlupinco

As we approach the end of the year, it’s important to start thinking about ways to lower your tax bill for 2022. One of the first steps you can check off your list? Determine whether you’ll take the standard deduction or itemized deductions for the year. 

Because of the high standard deduction amounts for this year—$25,000 for joint filers, $12,950 for single filers and married couples filing separately, and $19,400 for heads of household—many taxpayers won’t itemize their deductions. Also, note that many itemized deductions have been reduced or eliminated under current law. 

Those filers that do itemize can deduct medical expenses exceeding: 

  • 7.5% of adjusted gross income (AGI)
  • State and local taxes up to $10,000
  • Charitable contributions
  • Mortgage interest on a restricted debt amount

Unless they exceed your standard deduction, however, these deductions won’t save you money on your taxes. 

Working around deduction restrictions

By applying a “bunching” strategy to either push or pull discretionary expenses and charitable contributions into a tax-advantageous year, some taxpayers may be able to work around deduction restrictions. For example: if you’ll have itemized deductions for this year but not next, consider making two years’ worth of charitable contributions at one time. 

Keep reading for more ideas on how to work around deduction restrictions. 

Postpone income until 2023

By postponing income until next year and accelerating deductions into this year, you can claim larger 2022 tax breaks that are phased out over various AGI levels. 

These include: 

  • Deductible IRA contributions
  • Child tax credits
  • Education tax credits
  • Student loan interest deductions

Postponing income may also appeal to taxpayers with changed financial circumstances who anticipate being in a lower tax bracket in 2023. That said, some individuals may find it beneficial to accelerate income into 2022, especially if they anticipate being in a higher tax bracket next year. 

Convert a traditional IRA into a Roth IRA

Eligible individuals may want to consider converting a traditional IRA into a Roth IRA by the end of the year—particularly those with IRA-invested stocks or mutual funds that have lost value. 

Note that this conversion will increase your income for the current year, potentially reducing tax breaks that would otherwise be subject to phaseout at higher AGI levels. 

Account for the NIIT

For high-income individuals, it’s important to consider the 3.8% net investment income tax (NIIT) on certain unearned income—3.8% of the lesser of net investment income (NII), or excess of modified AGI (MAGI) over a threshold amount.

That threshold amount is: 

  • $250,000 for joint filers or surviving spouses
  • $125,00 for married individuals filing separately
  • $200,000 for others

Your desired approach to minimize or eliminate that 3.8% surtax will depend on your estimated NII and MAGI for the year. Note that NII does not include IRA (or most retirement plan) distributions. 

Defer bonuses

If you anticipate a bonus coming your way this year, it may work in your favor to speak to your employer about deferring it until early next 2023. 

Make qualified charitable contributions from a traditional IRA

Those who will be 70.5 years of age or older by the end of 2022 should consider making this year’s charitable donations through qualified contributions from a traditional IRA. This is especially advantageous for those who don’t itemize deductions. 

As these distributions are made directly from your IRA, the contribution amount is not included in your gross income or deductible on your tax return. 

Account for annual gift tax exclusions

Gifts of up to $16,000 made to each recipient can be sheltered by the annual gift tax exclusion if they are given before the end of the year. 

Need more ideas? Speak with a tax professional

These are just a few of the ways that you can save taxes this year. Contact us to work with a seasoned tax professional who can help you determine the best next steps for your situation.

moving-out-of-state-its-time-to-review-your-estate-plan

Moving Out of State? It’s Time to Review Your Estate Plan
Moving Out of State? It’s Time to Review Your Estate Plan 1600 941 smolinlupinco

If you’re planning a move to a different state, you probably have a long list of items to address: securing vehicle registrations, finding new primary care providers, and updating financial records, just to name a few. 

As you work your way through your to-do list, don’t forget to review your will and other estate planning documents—because a different state likely means different laws. 

State laws for estate planning

While your will is generally valid in any state, it’s worth noting that laws governing wills and most other estate planning documents can vary from state to state. Depending on where you move, you may need to take some extra steps to ensure total enforcement, such as appointing a new executor. 

Not only do you need to navigate different state laws, but you also need to stay abreast of changes, because state laws for estate planning often undergo reforms. In order to achieve the desired results and avoid forfeiting certain tax benefits—or, in a worst-case scenario, having your documents deemed obsolete—it’s important to stay up-to-date on current policies. You’ll also want to consider the impact of the new state tax on your pensions and other retirement plans. 

Review before you move

To simplify the process in the long term, we recommend reviewing your estate plan before you make the move to a different state. That way, you can determine whether any changes need to be made and revisit your documents accordingly. 

Need help? Contact us to work with an experienced tax professional.

are-tax-free-bonds-really-free-of-taxes

Are Tax-Free Bonds Really Free of Taxes?
Are Tax-Free Bonds Really Free of Taxes? 1600 941 smolinlupinco

While investing in tax-free municipal bonds generally provides tax-free interest, you may still encounter tax consequences. Keep reading to learn more about the potential tax and other financial consequences of investing in tax-free bonds.

Purchasing tax-exempt bonds

There are no immediate tax consequences for purchasing a tax-exempt bond for its face amount, whether on the initial offering or in the market. If you buy a tax-exempt bond between interest payment dates, however, you will owe the seller any accrued interest since the most recent interest payment date. 

The amount of interest accrued is then treated as a capital investment and will be deducted as a return of capital from the following interest payment. 

Is interest included in income?

Generally speaking, interest received on a tax-free municipal bond will not be included in gross income—but it may be used for alternative minimum tax (AMT) purposes. Tax-free interest may be appealing, but it’s important to note that compared to an otherwise equal taxable investment, a municipal bond may pay a lower interest rate. What really matters is the after-tax yield. 

The after-tax yield for a tax-free bond is typically equivalent to the pre-tax yield. Alternatively, the after-tax yield for a taxable bond is determined by your interest amount after accounting for the increase in your tax liability due to annual interest payments—which is based on your effective tax bracket. 

Taxpayers in higher brackets tend to be more interested in tax-free bonds, since excluding interest from income offers a greater benefit. Taxpayers in lower brackets, however, may find that the tax benefit from excluding interest from income may not adequately make up for a lower interest rate.

While not taxable, municipal bond interest still shows on a tax return. This is because tax-exempt interest is taken into account when determining the amount of taxable Social Security benefits (and other tax breaks). 

Tax-exempt bond interest and the NIIT

Another tax advantage of tax-exempt bond interest is that it is exempt from the 3.8% net investment income tax (NIIT). 

This is imposed on the investment incomes of individuals whose adjusted gross income exceeds:

  • $250,000 for joint filers
  • $125,000 for married filing separate filers
  • $200,000 for other taxpayers 

What about retirement accounts?

Because the income in your traditional IRA or 401(k) isn’t currently taxed, it generally isn’t logical to hold municipal bonds in those accounts. Once you start taking distributions, however, the entire amount withdrawn may be taxed. 

For those who want to invest retirement funds in fixed-income obligations, it’s typically a good idea to invest in higher-yielding taxable securities. 

Consult with a tax professional

Before investing in tax-free municipal bonds, it’s important to fully understand the tax implications—and those mentioned above are only some of the tax consequences. If you need assistance understanding and applying tax rules to your situation, contact us to work with a knowledgeable tax advisor.

© 2022

work-opportunity-tax-credit-how-can-you-benefit-as-an-employer

Work Opportunity Tax Credit: How Can You Benefit as an Employer?
Work Opportunity Tax Credit: How Can You Benefit as an Employer? 1600 941 smolinlupinco

In today’s tough job market, the Work Opportunity Tax Credit (WOTC) may benefit employers—particularly those who hire workers from targeted groups who often face barriers to employment. 

In September, the IRS issued updated information on the WOTC pre-screening and certification process. To meet the pre-screening requirements for job applicants, both applicants and employers must complete a pre-screening notice (Form 8850, Pre-Screening Notice, and Certification Request for the Work Opportunity Credit) on or before the day a job offer is made. 

Which new hires qualify employers for the WOTC? 

To be eligible for the WOTC, an employer must pay qualified wages to members of targeted groups. 

These groups include:

  • Temporary Assistance for Needy Families (TANF) program recipients
  • Veterans
  • Ex-felons
  • Designated community residents
  • Vocational rehabilitation referrals
  • Summer youth employees
  • Families in the Supplemental Nutritional Assistance Program (SNAP)
  • Supplemental Security Income (SSI) recipients
  • Long-term family assistance recipients
  • Long-term unemployed individuals

Note that the WOTC is generally limited to eligible employees who begin work prior to January 1, 2026. 

Additional WOTC rules and requirements

The WOTC is worth up to $2,400 for each eligible employee, with $4,800, $5,600, and $9,600 for certain veterans and $9,000 for long-term family assistance recipients. 

Additional requirements to qualify for the tax credit include: 

  • Each employee must have completed at least 120 hours of service for the employer
  • Employees must not be related or have previously worked for the same employer
  • Summer youth employees must be paid for services performed in any 90-day period between May 1 and September 15

Work with our tax professionals

There are some cases in which an employer may choose to not claim the WOTC—and some circumstances where the rules may not allow its allocation. Most employers hiring from targeted groups, however, can benefit from the tax credit. 


Contact us to work with an experienced tax advisor and determine the best next steps for your situation.

why-auditors-prefer-to-assess-fraud-risks-face-to-face

Why Auditors Prefer to Assess Fraud Risks Face-to-Face
Why Auditors Prefer to Assess Fraud Risks Face-to-Face 1600 941 smolinlupinco

Due to AICPA auditing standards—namely the Clarified Statement on Auditing Standards (AU-C) Section 240, Consideration of Fraud in a Financial Statement Audit—financial statement auditors are required to evaluate and assess fraud-related material misstatement risks and determine appropriate responses. 

Keep reading to learn why it’s important to conduct in-person interviews when evaluating fraud-related misstatement risks. 

What to expect in an audit inquiry

A crucial aspect of the audit process is asking fraud-related questions. Specific areas of inquiry include: 

  • Whether management is aware of any fraud—actual, suspected, or alleged 
  • Management’s identification, assessment, and response tactics regarding fraud risks 
  • The results of any fraud risk assessments 
  • Any previously identified fraud risks
  • Transaction, account balance, or disclosure classes likely to contain a fraud risk
  • Any communications regarding fraud risk identification and response processes, including sharing views on appropriate and ethical business practices and behavior with employees  

Each audit requires a separate interview, as fraud risks can vary by accounting period. 

The importance of nonverbal communication

While the pandemic resulted in a number of audit procedures being done remotely, auditors are returning to face-to-face fraud risk interviews for more effective evaluations. 

Psychologists estimate that 55% of communication is body language—meaning that in an in-person interview, auditors can pick up on nonverbal cues they may have otherwise missed in a virtual setting. In addition to the words being spoken, tone and inflection, and the speed of response, auditors can also keep an eye on the interviewee’s physical comportment. 

The auditor will look for signs of stress as the interviewee is answering questions—for example, long pauses before responding, starting over mid-explanation, sweating profusely, or fidgeting. 

An additional benefit of face-to-face interviews is that they allow for immediate follow-up. While in-person meetings are ideal, they aren’t always a viable option. In these cases, video or phone calls are the next best thing.

Work with us

External audits are an important tool for identifying fraud risks. While they’re not guaranteed to detect all unethical behavior, they often deliver results. According to Occupational Fraud 2022, companies who had financial statements audited were able to detect fraud 33% faster—and lost one-third less from fraud—than those who hadn’t.

Our team can help you with the audit process by providing services tailored to your unique needs. By anticipating the type of information we’ll ask for, from questions to source documents, you can help streamline our fraud risk assessment process. When you provide prompt responses, we can ensure that your audit stays right on schedule. Contact us to learn how we can help. 

does-your-income-warrant-extra-taxes

Does Your Income Warrant Extra Taxes?
Does Your Income Warrant Extra Taxes? 1600 941 smolinlupinco

If you’re a high-income taxpayer, you may need to pay two extra taxes: a 3.8% net investment income tax (NIIT), and an additional 0.9% Medicare tax on wage and self-employment income. 

Keep reading to learn more about these taxes and what they might mean for you. 

3.8% NIIT

In addition to income taxes, the NIIT applies to your net investment income. This tax affects taxpayers with adjusted gross income (AGI) exceeding the following: 

  • $250,000 for joint filers
  • $200,000 for single taxpayers and heads of household
  • $125,000 for married individuals filing separately 

If your AGI is above this threshold, the NIIT applies to the lesser of: 

  • Your net investment income for the year, or
  • The excess of your AGI over the threshold amount for the tax year 

What incomes are subject to the NIIT? 

Net investment incomes subject to the NIIT include interest, dividends, annuities, royalties, rents, property sale net gains, and passive business income. This does not include wage income and active trade or business income, or tax-exempt income tax such as bond interest. 

After considering your income needs and investments, you may want to consider switching some of those taxable investments over to tax-exempt bonds. 

How does the NIIT apply to home sales? 

If you sell your primary residence, you may be able to exclude up to $250,000—or $500,000 for joint filers—in your income tax, which will not be subject to the NIIT. If your gain exceeds that amount, however, it will be subject to tax. This also applies to gain from selling a vacation home or other secondary residence. 

Note that distributions from retirement plans such as pension plans and IRAs are not subject to the NIIT. However, if these distributions push your AGI above the threshold, they can cause other income types to be taxed. 

Additional 0.9% Medicare tax

In addition to the 1.45% Medicare tax that applies to all wage earners, some high wage earners are subject to an additional 0.9% Medicare tax. This applies to wages that exceed: 

  • $250,000 for joint filers
  • $125,000 for married individuals filing separately
  • $200,000 for all others 

Note that this tax only applies to employees—not employers. 

The employer must begin withholding the additional 0.9% Medicare tax once their employee’s wages for the year reach $200,000. However, if the employee (or the employee’s spouse) has additional wage income from another job, this may prove insufficient. Instead, the employee may file a new W-4 with the employer to request extra income tax withholding. 

How does the extra Medicare tax affect self-employment income? 

In addition to the regular 2.9% self-employment Medicare tax, the additional 0.9% Medicare tax applies to self-employment income for the tax year that exceeds the same amounts as wage earners—note, however, that the $250,000, $125,000, and $200,000 thresholds are modified according to the self-employed taxpayer’s wage income. 

Work with our tax advisors

Income taxes can be complicated, especially when they vary from year to year. Is your income high enough that you owe these extra taxes? Contact us to discuss your taxes and their implications with a qualified tax professional.

© 2022

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