by Blair Butters | Oct 26, 2021 | General Tax and Accounting Information, IRS, Tax Credits, Tax Planning
Now that the filing season for 2020 tax returns is over, it’s time to start thinking about next year’s tax return, which may look different from prior years because of the pandemic relief bills, tax law changes, updates, new rules, and annual inflation adjustments. The earlier you begin, the more you can potentially save, and to get a head start, we’re breaking down key tax changes to help you prepare for April 15. Check out this list of 6 tax changes so you can begin preparing today. Child tax credit For the tax year 2021, the child tax credit will be increased from $2,000 to $3,000 for children over age 5 and under age 18 and to $3,600 for children 5 and under. However, for those with modified adjusted gross income above $75,000 for individuals, $112,500 for heads-of-household, and $150,000 for married filing jointly, the credit is reduced gradually until the credit is $2,000 per dependent. The credit is further reduced for those with modified adjusted gross incomes of $400,000 for married filing jointly and $200,000 for all other filing statuses. The enhancement is that, generally, the credit is fully refundable and now includes children who are 17 years old. The credit is claimed on your tax return like in prior years. Another important change to note is that at least half of the credit is paid in advance with monthly installments that began in July and will end in December 2021. The other half of the credit is claimed on your 2021 tax return. You can opt out of the monthly payments using the tool at the IRS...
by Blair Butters | Sep 29, 2021 | Client Features
In a two-bay garage in 1986, Tom Schoenmann and his wife, Lisa, opened Tom’s Auto Center with the dream of providing quality maintenance and repairs for their neighbor’s vehicles. Soon after, they expanded to the back of a body shop on Terminal Drive before building their 12-bay garage in 2000. In that time, the shop has hired additional technicians and service advisors to keep up with demand. In 2018, Tom partnered with Tom Sumwalt, a technician who worked at the shop for more than 15 years. Tom Sumwalt will be the full owner in the next 5 years, allowing the original Tom and Lisa to enjoy a well-earned retirement. Little Town Feel, Big Time Service Tom’s Auto Center focuses on a “little town feel with big time service,” providing a trusted and reliable shop for the greater McFarland area. Technicians are available for maintenance, repair, and tire installation for automobiles and light trucks. “We’re here for our neighbors and the community really focusing on helping them maintain their vehicles to the level they want, and when they do have a break down, we can efficiently and effectively fix the issues,” said Mr. Sumwalt. “We pride ourselves on our service and taking care of your whole vehicle, and keeping it in the ideal condition for a long time.” Mr. Sumwalt is particularly proud of the Tom’s Auto team because of the way they handle nuances and updates in the automobile industry’s computer technology. Each vehicle, even those of the same make, operate 15-30 computers at a time, with updates coming out consistently. Technicians and service advisors at Tom’s Auto are committed to continued learning so they can provide the most accurate and efficient diagnoses for customers. “We make sure...
by Blair Butters | Aug 20, 2021 | IRS, Tax Planning
A quick tax guide for sole proprietors just starting out Starting a small business is exciting, however, if you’re used to working as a full-time employee, the transition to self-employment can be overwhelming when it comes to keeping track of your taxes. Understanding what the IRS expects from small business owners is a key piece in the success of keeping your business running. In today’s blog, we’ll focus on taxation for sole proprietorships, as this business structure is the simplest and the most common choice for many business owners who are transitioning from employee to self-employed to launch their first small business. A sole proprietorship is an unincorporated business that has just one owner. It is known as a “pass-through entity” for tax purposes because the business income passes through to the business owner, who then reports it on their personal income tax return. We will focus on sole proprietorships reported on Federal Schedule C. Sole proprietors that do farming activities are similar but are reported on Federal Schedule F. Sole proprietors with rental business activities reported on Schedule E will not be covered in today’s blog. As a sole proprietor, you are responsible for paying the following: State and federal income tax Self-employment tax Sales tax, if applicable We’ll dive into each of these items below. State and Federal Income Tax For Wisconsin sole proprietors, business income and expenses are generally reported on Federal Schedule C – Profit or Loss from Business. The revenues and expenses of the business are reported on this schedule with the net profit/loss carried to the first page of Form 1040, your personal...
by Blair Butters | Jun 26, 2021 | Client Features
A walk off the beaten path led this entrepreneur to her sweet destiny Fond memories make a lasting impression Gail Ambrosius discovered her love of chocolate as a child, making fancy chocolates with her mom. When relatives would visit, she would take the treats around on trays and everyone would ooh and ahh over them. Her appreciation deepened when she traveled to Paris in high school. After getting separated from her student group for the day, she meandered the streets, visiting little chocolate shops and making the most of her three years studying French. She observed people flowing in and out of the shops, savoring treats and purchasing gifts for loved ones. It occurred to her that she wanted to help people feel that joy. Best-laid plans don’t go as planned Gail returned home with the dream of opening her own chocolate shop. Life took her on a small detour instead. She moved to Madison, married, had a child, divorced, and was encouraged to get a stable, well-paying job. She took people’s advice, went to school for cartography and worked a state job for 10 years when she was laid off unexpectedly. Unemployed and a single mother, she needed to figure out what to do next. This was her chance to follow her heart and take the leap into entrepreneurship. Gail claims that once people follow their hearts, doors will open. After learning the craft and absorbing as much as she could from shops in France, she opened Gail Ambrosius Chocolatier in 2004. One of her favorite aspects of the shop was being able to see all of the...
by Blair Butters | Apr 28, 2021 | General Tax and Accounting Information, IRS, Tax Planning
As we all know, the ancient Greek quote “change is the only constant” most certainly applies to your taxes, and this year has seen more changes to tax guidelines and requirements than in many other years. So, in today’s blog, we wanted to shine a light on some of the most common ones. Change in Charitable Donation Deductions for Non-Itemizers In 2020, the IRS allowed taxpayers who did not itemize deductions to deduct as much as $300 in cash contributions made to charity, for both filing single and jointly. In previous years, this deduction was only an option if you chose to itemize your deductions. However, the passing of The Coronavirus Aid, Relief, and Economic Security Act (The CARES Act) allowed non-itemizers a charitable deduction. These changes are set to apply through 2021 as well with the same $300 deduction for individuals and an increase to $600 if you file as a married couple. These particular changes were made in order to encourage taxpayers to donate to charitable causes throughout the pandemic. Higher Standard Deductions Standard deduction amounts for each filing status have also increased. In order to account for inflation, these numbers typically rise by $200-$300 each year regardless of circumstance. An increase in standard deduction amounts ultimately reduces the amount of income you are required to pay taxes on. Here are the tax brackets and the new deduction amounts for 2021. Married filing jointly: $25,100 – up $300 from 2020 Married individuals filing separately: $12,550 – up $150 Head of household: $18,800 – up $150 Single: $12,550 – up $150 Required Minimum Distributions...
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