Returning Value Blog

Senate Democrats have released details of two tax proposals – a minimum tax on large corporations and a tax on billionaires – that, if enacted, would be used to help pay for spending for social infrastructure under the Build Back Better Plan.

With the increasing cost of employee health care benefits, your business may be interested in providing some of these benefits through an employer-sponsored Health Savings Account (HSA). For eligible individuals, an HSA offers a tax-advantaged way to set aside funds (or have their employers do so) to meet future medical needs. Here are the important tax benefits:

A version of H.R. 5376 (the Build Back Better Act), released on October 28, 2021, by the House Budget Committee, eliminates many of the previously proposed tax increases that would have impacted individuals.

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.

Organizations are faced with the challenge to increase operational efficiency while reducing costs and retaining the personnel they need to be strategic. Talent shortages and the resource drain associated with recruiting, onboarding, on-the-job training, and continuing education have many organizations looking for a more efficient and practical approach. Having the flexibility to allocate resources to align with organizational objectives is imperative. 

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, thereby reducing taxes and boosting cash flow. And under current law, the potential benefits of a cost segregation study are now even greater than they were a few years ago due to enhancements to certain depreciation-related tax breaks.

The COVID-19 pandemic is still adversely affecting many businesses and not-for-profit organizations, but the effects vary, depending on the nature of operations and geographic location. Has your organization factored the effects of the pandemic into its financial statements? You might not have considered this question since last year if your organization prepares statements that comply with U.S. Generally Accepted Accounting Principles only at year-end.

Are employees at your business traveling again after months of virtual meetings? In Notice 2021-52, the IRS announced the fiscal 2022 “per diem” rates that became effective October 1, 2021. Taxpayers can use these rates to substantiate the amount of expenses for lodging, meals, and incidental expenses when traveling away from home. (Taxpayers in the transportation industry can use a special transportation industry rate.)

WHAT’S NEXT FOR EMPLOYEE MOBILITY?

For many businesses, the COVID-19 pandemic accelerated the future of work. Businesses are reevaluating their needs for travel, talent acquisition, and office space. Some have even transitioned away from the physical office entirely and opted to work 100% remotely. Businesses suited for remote work may be looking to hire the right person for the job, regardless of location; however, the ability to adopt a hybrid or fully remote model may be limited by industry. For example, a 2020 study by McKinsey found that the finance, management, professional services, and information sectors have the highest potential for remote work with no loss of productivity.

Timely financial reporting is key to making informed business decisions. Managers need to know what’s in the pipeline to respond promptly and decisively. Unfortunately, it typically takes several weeks to prepare financial statements under U.S. Generally Accepted Accounting Principles (GAAP). And many companies only produce GAAP financials at the end of the quarter or year. In the meantime, managers may turn their attention to simple “flash” reports.