deduction: Explore its Definition & Usage Your payroll department must identify pretax deductions — amounts removed from gross pay before calculating payroll taxes — to ensure compliance and maximize employee benefits. A standard deduction is a set amount that a person who chooses not to itemize their deductions on his tax return. The tax code allows for a standard deduction to be taken, rather than itemizing such expenses as medical bills, premiums paid for medical…

Alternatively, the company paying large dividends that exceed the other figures can also lead to the retained earnings going negative. A positive retained earnings balance demonstrates that the company is retaining a portion of its income for reinvestment in the business. This can indicate healthy financial management and a commitment to growth. However, retained earnings should be analyzed in conjunction with other financial metrics to get a complete picture of the company’s financial performance. High…

Corporations Reap Billions in Tax Breaks Under Bonus Depreciation Under this method, the total depreciable amount is divided by the estimated total units the asset will produce over its useful life. Depreciation expense is then calculated based on the actual units produced in a given period. For example, if a machine is expected to produce 100,000 units over its life and costs $100,000, the depreciation expense per unit would be $1. If the machine produces…