The Small Business Tax Help Blog

Posts Tagged ‘taxes’

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If you are leaving your current employment, one important consideration is whether or not to rollover your 401k. Leaving your money in your previous employer’s 401k plan takes you out of the driver’s seat. Your retirement funds will remain subject to your former employer’s decisions about what you may invest in, and fees you must pay. Unfortunately, many people get hit with unnecessary penalties by withdrawing their funds rather than deciding to rollover their 401k plan, which can reduce retirement savings dramatically. So, the best option is to rollover your 401k.

Why Rollover

The 401k rollover is an ideal alternative to funds withdrawal, as it allows you to move funds from your existing retirement account into your new employer’s plan, an IRA plan run by a brokerage or Fund company, or a self-directed individual retirement account (IRA). Here are more advantages to consider before an IRA rollover:

Better Investment Options - You have the right to select your own investment options, within the scope of the brokerage or fund that you choose to rollover your IRA into, and not get limited to the funds selected by your employer.

Lesser Fee - Under an employer-directed 401k, you may be charged a sum up to 2 percent from your account manager. When you rollover your IRA, you may choose an administrator that does not charge high administration fees, hence enhancing immediate savings.

Easy Account management - You have the right to choose from hundreds of IRA administrators. Take care to select a brokerage or fund company that has a reporting style that meets your needs. Many providers allow 24-hour internet access to modify your selections, giving you the flexibility to adjust to market conditions and protect your savings.

Ways to rollover your 401k

Rollover into your new employer’s plan: Rolling into your new employer’s 401k is efficient because you have no investment minimum on the fund options. Moreover you may like to roll the money into your new employer’s plan because:

Aside from some benefits, there are also many drawbacks to consider when you rollover your 401k to a new employer’s 401k plan. First, these accounts are employer-directed, so as long as you are an active employee of the particular organization, you are restricted to these plans and rules. You will be limited to the investment options chosen by the employer and you will not have access to your funds unless you change your job or take a 401k loan.

Rollover into an IRA: A 401K rollover to IRA could be the smartest option for your retirement money. Depending on a few simple factors, you have the choice of rolling your 401k into a Traditional IRA, a Self-directed IRA, a Roth IRA, or a Simplified Employment Pension (SEP) IRA. These differ in the amount that you may contribute annually, their pre-tax or post-tax status, and the ways that vehicles in which they may be invested.

Once you have chosen the IRA that you are eligible for and that meets your needs, you have to choose the firm or mutual fund company with which you want to invest your IRA. These decisions are best made with the help of a financial planner. Select the firm that clearly states its terms, fees and other specific conditions. Talk to your advisor and research the mutual fund or money manager where you might invest. Now you are ready to open your account and get your money rolled over. Most IRA managers make the process so simple that you can do it online during your lunch break.

The main benefit of 401k to IRA rollover is that your retirement funds can grow tax-free providing you the means to enjoy a prosperous retirement.

Wealth check: ‘I want to turn my music into a business’

Jay Marsh is a musician from Manchester. Six months ago, he gave up his job of four years as an administration assistant to concentrate on his indie rock band, the Skinny Machines.

Individual 401k (i401k) For Self Employed Business Owners Offered By Sunwest Trust, Inc

Press Release / News

Americans of all ages and income brackets continue to grow increasingly unhappy at work-a long-term trend that should be a red flag to employers, according to a report released today by The Conference Board.

Excel Busn Math 42: Federal Income Tax Payroll Deduction

Question: Calculating self employment taxes, am I doing this right?

Hello all, desperately need some help in making sure I don’t make a huge tax error. I currently have a route that I do for the local paper where I collect old papers and coins from the racks. They pay $57 a week. Here are the current figures I’ve come up with:

52 weeks a year x $57 =$2964.00
$2964 x .9235=$2737.26

$2737.26 x.153=418.80 in yearly taxes

Does this calculation sound correct for me?

Is it safe to say that my weekly taxes are $8.06?
I’m signed up with the IRS online tax payment system and I’d like to pay my estimated taxes at least bi-weekly.

The company has factored in the mileage of the route into my weekly pay, I am wondering that since they did this, can I no longer deduct gas expenses?

I live in California, and file the rest of my income taxes as single, itemized deductions (have a mortgage and real estate taxes.)
I really appreciate any intelligent answers from anyone who knows a thing or two about taxes, I’m having a hard time!

Answer: The calculation for your self employment tax looks correct, except that you might be able to deduct mileage from what you make before figuring the tax. You said they "factor in mileage" - if you mean they reimburse you for miles but don't include it on your 1099, then you can't deduct the miles. If they reimburse you for miles, but that's included in the $57 they pay you and it will be on your 1099, then you can deduct your mileage expenses.

Since you have other income, you'll also owe income tax on this amount in addition to your self employment tax. Without knowing what your tax bracket is for your other income, there's no way to tell what it will be on the route. That's very likely another 15 or 25%.

And there will also be CA tax on it - again, without knowing about the rest of your income, no way to tell what that might be either, but it could be substantial.

Finally, what's this IRS online tax payment system you are signed up with? It's common to make quarterly payments (mailing them in), but an online system that automatically takes money bi-weekly is a new one one me - be sure it's really the IRS.

Fairbanks Ranch deal protested

Fairbanks Ranch Country Club By Joe Tash Contributor The Fairbanks Ranch Country Club, according to its Web site, is a "distinctly private, member-owned Club consisting of the most prominent business, professional and social personalities of the community." While the club itself may be private, its 27-hole golf course, opulent clubhouse and other facilities sit on public land, owned by the city ...

Estimated Taxes Online

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New Bersin & Associates Study Reveals Business Impact of Customer Training at Intuit

Learn.com®, the knowledge platform company announced today that Bersin & Associates has completed an in-depth case study of the customer training function at Intuit Inc. (Nasdaq: INTU), a leading provider of business and financial management solutions for small and mid-sized businesses; financial institutions, including banks and credit unions; consumers and accounting professionals. The study …

Small Business Tax Cuts New Strategy For Job Growth

Question: As an independent contractor, what can I use as a deduction come taxes next year?

Could I deduct my car payment? Can I deduct any services to my car, such as oil changes or new tires? I know I can definitely deduct the gas/mileage I use while on the job. Do I need to keep track of how many miles I drive each day for my job? Also, should I keep my receipts for gas? Can I deduct the food I buy while on the job? Please, if any of you are aware of even the smallest things that I should be keeping receipts for, please let me know. I am 21 years old, unmarried, and without children. I am working as an independent contractor, just started a few days ago. I will make about $12500 for the next 6 months remaining in 2006. How much should I set aside to pay taxes next year? I will be doing a lot of driving for the job, so do the deductions that come along with driving for the job make a huge difference? I am worried that I will be stuck with a rather large payment next year and just want to be adequately prepared. Thanks in advance for your help.

Answer: Here's a start...

YES... keep track of every mile and wheter it was personal or business. Basically, you can deduct the percentage that is business for all of the maintenance things. Yes keep receipts.

I'm guessing you are single, which means there is a standard deduction of $5000 available. You probably will use the standard rather than the itemized deductions I described above. Do you go to school? Have kids? These create more deductions.

For example: You earn $12500
Subtract $5000 standard deduction
Subtract $3200 personal deduction (everyone gets one)
Approx. Taxable Income: $4300 (the amount you would pay taxes on)

So... 10% tax bracket... you would be liable for $430 for taxes.

Note: I am not a CPA, contact your tax professional! Good luck.

Bayport residents to pay slightly less in property taxes

A small jump in the tax levy, combined with a larger drop in property valuations, should result in a drop in taxes for most Bayport property owners.

Contractor Tax Can a contractor pay less tax?