The Dept. of Labor (DOL) has just issued regulations that will make it easier for small businesses to provide retirement savings plans to their workers. Final regs regarding association retirement plans (ARPs) will allow small businesses to band together to offer 401(k) and other defined contribution plans to their employees. ARPs could be offered by associations of employers in a local, state or multistate metropolitan area; employers that are part of a specific industry (nationwide); or professional employer organizations. Sole proprietors and their families would also be permitted to participate in ARPs. The final regs will become effective on Sept. 30, 2019.
An offer in compromise (OIC) is an agreement between a taxpayer and the IRS to settle a tax debt for less than the amount owed. One taxpayer had unpaid taxes of $39,713, partly due to withdrawals that he’d taken from his retirement plan, on which no federal tax was paid. He stated that he needed the withdrawals to maintain his family’s standard of living. After receiving a Notice of Federal Tax Lien, he proposed an OIC of $1,500 and asked to have the lien withdrawn. Based on a review of his overall finances, the IRS Settlement Officer rejected his OIC, stating it was “substantially below” his ability to pay and that a “reasonable cause for failure to pay did not exist.”
Managing the amount of tax you’ll owe for this year may require thinking about tax issues now, long before it’s time to file. One aspect that affects your tax bill is your adjusted gross income (AGI). The higher your AGI, the higher your tax rate. In a Tax Tip, the IRS offers some ways to lower your AGI during the year. A few ideas: Contribute to a Health Savings Account; claim educator expenses if you’re a qualified educator; and pay student loan interest. You can also lower your AGI by contributing money to a retirement plan through your job, such as a 401(k) or other qualified plans, or stashing money in a traditional IRA. For more information, contact us or visit http://bit.ly/2Yf9a2s.