Tax Analysis: Will You Owe Money?

No one likes to be taken by surprise, especially when it comes to taxes. That’s why it’s a good idea to consult a tax professional for detailed tax analysis, particularly if you’ve recently had a change in circumstances. A divorce, starting a new business, selling major assets, and many other big life and business events can dramatically change your individual and business tax liability.

Depending on the nature of your income and your business, you may need to consider:

• Income Tax: Your tax rate on business income can vary widely depending on your business’s corporate structure and deductions. Some businesses, such as LLC or S Corporations, are pass-through structures and only face taxes on each owner’s share of their business income.
• Payroll Tax: Your business must pay all payroll taxes fully, including the employer portion of payroll taxes. While many corporate business owners are protected from legal liability through their corporate structure, the law still holds owners and managers responsible for unpaid trust fund amounts. These “trust funds” include social security taxes, excise taxes, and more that you withhold from paychecks and pay on behalf of employees. If you willfully fail to pay these, you could face personal liability for the Trust Fund Recovery Penalty under U.S. tax law.
• Sales Tax: Most states charge a sales tax on goods or services, which you collect at the time of a sale. Your business must then pay these amounts to the state or locality.
• Franchise Tax: If you have a connection to another state through sales, that state may charge you a franchise tax. However, every state calculates these amounts differently.
• Property Tax: You may owe state tax on property or real estate you or your business own.
• Excise Tax: An excise tax is an indirect tax on goods or services that some states charge in lieu of corporate sales or income tax. For example, some states may charge a tax on “gross receipts.”
• Self-employment Tax: If you are self-employed, you may need to pay social security and Medicare taxes that your employer would otherwise pay.

While this list of possible tax obligations is a good start, it’s by no means comprehensive. That’s why it’s essential that you consult a tax professional to ensure that you’re prepared for your tax liability. An experienced tax attorney can also help you plan for the future and show you ways to reduce your individual and business tax liability in the future.

Consult an Experienced Tax Attorney

At The Law Offices of Beverly Winstead, our skilled attorneys offer tax planning and analysis for individuals, businesses, and nonprofits. Attorney Beverly Winstead is an award-winning tax attorney with years of complex tax planning experience, and she can help you too. Call us at 301-306-1234 or contact us online to schedule your consultation.