In the new economy, many of us have had to re-think our approaches and attitudes towards work. Doing more with less, working more efficiently, and not limiting ourselves to our job descriptions to name a few.
The article below discusses 8 misconceptions that one should consider about their own approach to work.
As the push for tax reform starts to gel, the Democrats have one proposal so far that we’ve heard batted around in the past: reforming how S-Corporation owners take money out of the corporation.
Today, many S-Corp owners draw a nominal salary, and take the rest of their cash out of the company as distributions, which are not subject to Social Security, Medicare, or Unemployment taxes. This question of “reasonable compensation” has been a more frequent audit item in recent years.
The Democrats would like to see personal service S-Corps, like real estate agents, accountants, attorneys, and the like pay self-employment taxes on all of the profits of the S-Corp as long as 75% of the revenue was generated by 3 or fewer shareholders. This tax would be applied at the individual shareholder level to those with AGI on their personal return of $250,000 married filing joint, or $200,000 single. The same treatment would apply to partners in personal service partnerships.
The Republicans quashed this during the 2012 session, but it is expected to find more traction as overall tax reform is taken up early next year, especially given the desire to lower overall income tax rates, and the questionable health of the Social Security Trust Fund.
As we come out of the busy tax season, it’s now when we get to take a closer look at what’s in motion on the tax front in Washington. Here’s a quick synopsis of what we’re seeing.
- Federal Changes
- These very much depend on who comes out the winner in November, and not much is expected to be accomplished until after the election.
- Regardless of who wins, broad tax reform has been a consistent message of both parties, though with very different ideas on how that would look.
- The “AMT Patch” expired at the end of 2011. This rather technical issue is one that will have a big impact on average Americans in the 2012 year if they don’t do something about it.
We’ll keep watching for any developments and bring them to you as they come about.