The Burgess Group, PA
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General Information
Locality: Flowood, Mississippi
Phone: +1 601-939-7116
Address: 2506 Lakeland Dr 39232 Flowood, MS, US
Website: www.burgessgroup.net/
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Hope you have a safe and happy Halloween!
The Social Security Administration recently announced that the wage base for computing Social Security tax will increase to $147,000 for 2022 (up from $142,800 for 2021). Wages and self-employment income above this threshold aren’t subject to Social Security tax. The Federal Insurance Contributions Act imposes two taxes on employers, employees and self-employed workers. One is for Social Security tax, and the other for Medicare tax. There’s a maximum amount of compensation subject to the Social Security tax, but no maximum for Medicare tax. For 2022, the FICA tax rate for employers is 7.65% 6.2% for Social Security and 1.45% for Medicare (the same as in 2021).
Interested in participating in a 401(k) plan offered by your employer? Under a 401(k), you have the option of setting aside a certain amount of your wages in a qualified retirement plan. By making this election, you’ll reduce your gross income, and defer tax on the amount until the cash (adjusted by earnings) is distributed to you. It will either be distributed from the plan or from an IRA or other plan that you roll your proceeds into after leaving your job. Your elective contributions are subject to annual IRS limits. For 2021, the maximum amount permitted is $19,500. If you’re age 50 or older, you can make additional catch-up contributions. For 2021, that extra amount is $6,500.
If your business is depreciating over a 30-year period the entire cost of constructing the building that houses your operation, you should consider a cost segregation study. It might allow you to accelerate depreciation deductions on certain items, which can reduce taxes and boost cash flow. Under current law, the potential benefits are now even better than they were in the past due to enhancements to certain depreciation tax breaks. You may even be able to get the benefit of speedier depreciation for items that were incorrectly claimed. Cost segregation studies can yield substantial benefits, but they’re not right for all businesses. Contact us to find out whether this would be worthwhile.
Have you heard of the nanny tax? Even if you don’t employ a nanny, it may apply to you. Hiring a house cleaner or other household employee (who isn’t an independent contractor) may make you liable for federal income tax, Social Security and Medicare (FICA) tax and federal unemployment tax. You may also have state tax obligations. In 2021, you must withhold and pay FICA taxes if your worker earns cash wages of $2,300 or more ($2,400 in 2022). You pay household worker obligations by increasing your quarterly estimated tax payments or increasing withholding from wages, rather than making a lump-sum payment. Employment taxes are then reported on your tax return. Questions? Contact us.
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