Trump Warns Companies Considering Sending Jobs to Foreign Countries

One of the many promises president-elect Donald Trump made during his run to the White House was to keep more jobs in America. Now that he has been elected, it appears that he is serious about this promise. Trump recently made it very clear, in no uncertain terms, that companies that try to shift jobs or business operations overseas and then bring that money back here by selling their products in the U.S., without consequences, have another thing coming.

Trump warned businesses that following such a plan would earn them a 35 percent tax if they try to sell their products in America. There is good news though, as Trump has said he plans to significantly reduce regulations and taxes on corporations, which is designed to encourage companies to keep their employees and operations stateside instead of moving them overseas to more tax-friendly locations.

In several posts on Twitter, Trump stated: “The U.S. is going to substantially reduce taxes and regulations on businesses, but any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. without retribution or consequence, is WRONG! There will be a tax on our soon to be strong border of 35% for these companies.”

Trump hopes his stern warning will be enough to deter businesses from manufacturing so many product outside of the U.S. and thus produce more jobs for Americans.

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IRS to Put an End to Its Top 400 Report

Many people believe that the nation’s wealthiest individuals already make too much money without paying their fair share of taxes. Now that billionaire Donald Trump has been elected as our country’s next president, many expect that to only get worse. However, starting next year, it will now be very difficult for anyone to really know how much of a difference Trump’s new tax policies will make to the nation’s top earners.

That’s because the IRS recently announced that it would no longer continue to release its Top 400 Report, which is an annual statistical report of the top 400 taxpayers in the country, according to adjusted gross income. This year’s report, which for now will be the last, showed just how hard the current president’s tax hikes have hit the wealthiest taxpayers over the past several years.

In 2012, the top 400 paid an effective tax rate of 16.72 percent on average adjusted gross income of $226 million. Compare that to 2014 when the same group paid an effective federal tax rate of 23.13 percent on AGI averaging $318 million. If Trump’s tax proposals are put into law then the top 400 are likely to see their effective tax rate go back down again, but now that the IRS will no longer be releasing this report, there is no way to know by exactly how much.

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How to Successfully Invest Under President Trump

There is a lot of uncertainty for a lot of different reasons now that Donald Trump has been elected as our country’s next president. Whether you have concerns or not, Trump’s proposed tax policies are likely going to affect you one way or another. Another group of people that is also likely watching closely as Trump gets ready to take over the Oval Office is investors on Wall Street. So what should investors be looking for in order to be successful during Trump’s presidency?

The overriding belief is that investing will be profitable under Trump. That’s because investors will likely be keeping much more of their investment returns with Trump in office because the tax on capital gains is expected to decrease sharply. In fact, under Trump’s plans marginal tax rates are expected to be consolidated and lowered to 33 percent, 25 percent and 12 percent, as has been mentioned many times previously in this blog space. The tax rate on capital gains is expected to be half of those numbers.

Therefore, someone in the top tax bracket who now pays 20 percent on capital gains – plus the 3.8 percent Net Investment income tax as part of the Affordable Care Act – would pay only 16.5 percent under Trump’s plan. That’s a savings of 7.3 percent, which is significant. However, one still has to invest wisely in order to receive those benefits. According to many experts there are several investing tips to keep in mind, including:

  • Go after investments that produce high income at a steady rate.
  • It’s time to reconsider bonds, because interest from bonds is only taxed at half of your marginal rate.
  • Seek opportunities that have lower business taxes as the corporate tax rate is expected to be lowered significantly.
  • Pay taxes on retirement savings because you only have to pay once. If you pay them while the rates are lower you won’t have to pay again upon withdrawal when rates could be higher.

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Athletes Could See Big Tax Savings With Trump Proposals

It’s no secret that Donald Trump’s proposed tax plans would definitely benefit the nations’ wealthiest individuals. The president elect has made it clear he wants to overhaul our country’s tax system and his stated proposals indicate that the wealthy will see a healthy increase in the amount of money they get to keep.

Among the wealthy that will likely be saving a lot of money are professional athletes. Of course, almost all professional athletes make a very comfortable living, but certain of the top athletes in their given sports really stand to benefit from having Trump in the White House. First off, a large percentage of all professional athletes currently fall into the top tax bracket, which is more than 40 percent after adding the ACA net investment income tax of 3.8 percent. Under Trump that percentage would fall to 33 percent.

Here’s just one example of how much one star athlete could save thanks to the new president’s tax plans. Cleveland Cavaliers star LeBron James has a three-year $99 million deal. That means he would save an estimated $2.3 million every year on his salary alone. Add to that the savings he would receive on his endorsement earnings, which would be about $13.8 million a year, and James is likely to save more than $16 million annually in taxes.

There is a downside, as Trump has also proposed capping itemized deductions at $200,000, which means anything over that amount, which is entirely possible for James, he would not be able to deduct, thus reducing his total deductions amount. However, he would still likely have a total savings in excess of $15 million. James might have endorsed Hillary Clinton, but he will save more money with Trump.

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IRS Announces New Inflation Adjustments for 2017

While the 2016 tax year is still not quite over, the IRS has already announced some important inflation adjustments for the 2017 tax year, which taxpayers will file for in 2018. While you might be more worried about your upcoming tax return, there are some important changes to know about. However, that being said, with the new president-elect set to take office in January, some, or all of these changes could be changed again, as Donald Trump has already made it clear he wants to rewrite the nation’s tax policy.

In the meantime, the IRS stated that the standard deduction for taxpayers who are married filing jointly will increase by $100 to $12,700. However, the personal exemption for single filers will stay the same as last year at $4,050. The inflation adjustments also increased the top income levels of the tax brackets, but if Trump’s planned changes occur then these brackets would be obsolete, as the president-elect has already stated he wants to drop the current seven bracket system and replace it with just three.

Another tax that would be affected is the estate tax, which currently kicks in on estates with assets that surpass $5.45 million. In 2017 that number increases to $5.49 million. However, Trump has also stated that he would like to completely wipe out the estate tax so this could also be of little consequence by this time next year. Inflation adjustments will also affect the limit above which itemized deductions can be reduced, the maximum amount for earned income credit and the Alternative minimum tax.

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Tax Tips for Entrepreneurs

If you’re looking to start a new company in the coming year then you certainly have a lot on your mind, not the least of which is how you will get started, what will you do to market your company and what are your chances of achieving success. The concerns and issues are endless for entrepreneurs, so it’s no wonder that sometimes they can overlook a few things. However, this can be dangerous and ultimately lead to failure.

One of these things that entrepreneurs can’t afford to overlook are taxes. However, by understanding a few important principles you can avoid some of the common tax mistakes that could stop you in your tracks. The first thing you must decide is which type of company you will form, as all of them have different tax implications. Your choices include an S Corporation, a C Corporation or an LLC.

As a general rule, if you are getting help from outside investors go with a C Corporation. If your company structure is small with only one or two owners an S Corporation is probably fitting. If the owners desire more flexibility then consider an LLC, or even a C Corp.

There are several other issues that you must consider, including determining if your stock qualifies as a Qualified Small Business Stock. You also need to consider sales tax issues, payroll tax issues, and net operating losses and whether or not you want to be paid as an employee or as an independent contractor. These are just a few of the tax issues to consider if you’re an entrepreneur. If you have more questions, then please contact us today at GROCO. We can help you set up your company and get you aimed in the right direction for taxes. Click here or call 1-877-CPA-2006.

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IRS Changes Deadlines for 1099 Forms

It’s almost January. Are you ready for taxes? Of course, Form 1099s are an important part of any tax season, and this coming year will be no different. As a taxpayer, if you receive any kind of Form 1099 don’t ignore it. The IRS will get the same form and you will be held accountable for its contents. So, make sure you keep and report all Form 1099s that you receive.

On the other hand, if you are a business and you need to issue any of these forms to others there are some changes you need to know about. The IRS has announced changes to some of these Form 1099s. Here’s what you need to know. Starting next year, for the 2016 reporting season, the deadline for Forms 1099-MISC reporting nonemployee compensation in box 7, has been moved to January 31, which is the same deadline for when they need to be sent to recipients.

Previously, filers had more time, up to a month or two, to get those sent to the IRS, but that’s no longer the case. The good news is that for Forms 1099-MISC that don’t report in box 7, the filing dates have not changed. They must be mailed to the recipients by January 31 and to the IRS by the end of February.

The bottom line, whether you are going to give or receive any type of Form 1099, make sure you check the deadlines and do your due diligence. Don’t give the IRS any reason to pay extra attention your taxes return.

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Which Stocks Stand to Gain From Trump Victory?

News of Donald Trump’s victory on November 8th sent shockwaves around the world and initially sent the stock market down. However, the market has since stabilized and reports of a major decline have not panned out. Of course, the stock market is in constant flux and things can change at any time. However, for the time being, the market is maintaining a normal cycle.

That being said, many wonder what a Trump presidency will do to the stock market over the long haul. Will there be certain stocks that prosper and others that falter because Trump is in the Oval Office? Only time will tell, but there are certain stocks that might see a boost thanks to the new president-elect.

First off, Trump has made it clear that he would like to reduce the corporate tax rate from 35 percent to 15 percent, which would help almost all companies. Trump has also expressed a desire to cut back on the amount of red tape that banks have to deal with by easing regulations. There are other industries that could also be ripe for gains thanks to other Trump proposals.

Therefore, there are several stocks that could see a significant increase in the coming weeks and months, including Altria Group, AutoNation, CVS Health, Discover Financial Services, J.B. Hunt Transport and Republic Services, to name just a few. Stay tuned.

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Another Federal Tax Record Set in October

As the year winds down and we look ahead to another tax season, the Federal Reserve is looking at another record tax collection in October. According to the latest numbers released in the Monthly Treasury Statement, October set an all time record high for the month, with $221,692,000,000 collected. What a great way to start the fiscal year for the Treasury. That was an increase of more than $6.7 billion from last October.

However, despite the incredible numbers coming in, the federal government still had a deficit of more than $44 billion in the month, thanks to expenditures of more than 265 billion. Meantime, if you were to break down the numbers in October, on average the Federal Reserve collected roughly $1,459 from everyone who worked either full- or part-time during the month.

So where did the majority of that record revenue come from, you ask? The answer is largely from individual tax returns. According to the Treasury, Americans paid $121,576,000,000 in income taxes in October. But the tax bill for Americans doesn’t stop there. Collectively the country paid another $79,361,000,000 in Social Security and additional payroll taxes.

The rest of the money came from corporate taxes: $2,27 billion; excise taxes: $5.7 billion; and estate and gift taxes: $3.06 billion.

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Top Tech Issues to Watch With Trump

Now that Donald Trump is set to become the nation’s 45th president, there is a lot of talk about his proposed tax policies and how they will affect taxpayers from all walks of life. Taxes are of course a huge issue so it makes sense that they are currently receiving so much attention. However, there are several other important sectors and issues that could be affected positively or negatively by Trump’s presidential plan.

One such industry that is likely watching the Trump presidency closely is the tech industry, and not just because of taxes. There are several factors that will directly or indirectly affect the top tech companies.

Clean Energy – Trump has expressed doubt about global warming and he apparently does not see much value in climate-change spending. This could mean he will eventually scrap government incentives for companies that use alternative energy methods.

Immigration – One of the biggest issues that voters had with Trump was his stance on immigration. If he follows through with his proposed deportation efforts this could affect many of the big companies’ hiring practices, since employees with H-1B visas are so common in Silicon Valley.

Trade – Trump has strongly opposed the Trans-Pacific Partnership, which the tech industry has strongly endorsed. In fact, trump has talked tough against trade in general. If he follows through with his threats it could have major impacts on tech companies doing trade with foreign countries.

Manufacturing – Trump has stated his preference for bringing manufacturing jobs back to the U.S. It will be interesting to watch which policies, if any, he can employ to either force or encourage tech companies to bring these jobs back to America.

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