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San Jose foreign asset tax attorneyThe federal government has long been concerned with assets and businesses based abroad but owned by United States citizens. The IRS regularly looks to address income that is purposefully generated outside the country to avoid taxation. As part of the efforts to ensure that foreign investments are taxed correctly, the Tax Cuts and Jobs Act (TCJA), which was passed last year, made sizable changes to taxation rules, such as the addition of regulations mandating that global intangible low-taxed income produced by controlled foreign corporations be included in a taxpayer’s taxable income.

What Is a Controlled Foreign Corporation?

A controlled foreign corporation (CFC) is an American corporation that operates in another country with U.S. shareholders who hold 50% or more of the control of that corporation. American shareholders, directors, or officers of one of these businesses must report their income from the foreign corporation and pay taxes on that income. 

New Laws Under the Tax Cuts and Jobs Act

The TCJA provides that a U.S. taxpayer who possesses at least 10% of the value or voting rights in at least one CFC must now report global intangible low-taxed income from these CFCs as currently taxable income. This holds true even if there are no distributions to shareholders. 

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San Jose income tax attorneyOne change ushered in by the Tax Cuts and Jobs Act of 2017 permits eligible employees of privately held corporations to postpone paying income tax on the value of qualified stock options and restricted stock units (RSUs) granted to them by their employers. Under the law, one can postpone payment of this tax for up to 5 years.

This law is meant to encourage employee stock ownership in startup or early-stage businesses. It applies to stock options that are exercised and RSUs that are settled as of or after December 31, 2017. 

The IRS has announced and clarified many requirements that affect whether a person may be eligible for tax deferral. For example, in order for a company to be eligible, at least 80% of its domestic employees must have received stock options during a single calendar year. 

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San Jose tax law attorneyEven though Tax Day for most people is in April, it is important to think about your taxes throughout the year. Reviewing tax information such as your withholding amounts and making sure you are keeping appropriate records as the year progresses are prudent measures that can save you money and trouble once Tax Day arrives.

If this is something that you have not thought a lot about, or if you discover an issue with your taxes, you should contact a tax attorney as soon as possible. It may still be early enough to correct course and resolve the issue before the end of the year.

Is it Time to Check Your Paycheck Withholdings?

With the recent revisions to the tax code made by the Tax Cuts and Jobs Act of 2017, the IRS encourages taxpayers to conduct a “paycheck check up” to review how much taxes are being withheld from your paycheck. The IRS provides a withholdings calculator to help you determine what the proper amount should be. If you need to adjust your withholdings, you can fill out a new W-4 form.

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San Jose, CA small business tax credit lawyerThe federal Tax Cuts and Jobs Act of 2017 has brought sweeping changes to many areas of tax law. One change that might have been overlooked by businesses is that employers are now eligible for a tax credit if they offer certain kinds of paid family and medical leave to full and part-time workers. If you act before the end of this year, you may be able to qualify for this tax credit.

Qualifying for Tax Credits

Eligible businesses that enact qualifying paid family leave programs or amend existing ones by the end of this year will be able to claim the employer credit. This tax credit will be available for tax years 2018 and 2019. The credit is retroactive to the beginning of the business’ 2018 tax year for qualifying leave already given.

To qualify for the tax credit, employers must meet the following requirements:

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San Jose tax attorney, tax reform, Tax Cuts and Jobs Act, business auto deductions, tax codeThe Tax Cuts and Jobs Act of 2017 made seismic changes to tax law in the United States, and individual taxpayers, small businesses, and large corporations are working to determine how they will be affected by the updates that will be going into effect in the near future.

One aspect of the new law that many may not be aware of concerns vehicles purchased or leased by businesses. It is essential that business owners be aware of how these changes can impact the deductions they may claim.

Business Auto Deductions

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