August 2024
Tax Guide to Deducting Long-Term Care Insurance
You can protect yourself against the financial consequences of chronic illness or disability by purchasing long-term care insurance. The premiums for this insurance are not cheap, but tax law may let you write off some or all of the cost, thus subsidizing your purchase.
Smart Solutions That Decrease Social Security and Medicare Taxes
Rising federal employment taxes, including Social Security and Medicare, are a growing burden for employees, employers, and self-employed individuals. To mitigate these costs, consider operating as an S corporation or utilizing community property state rules for husband-wife businesses. Strategic tax planning can significantly reduce the impact of these increasing taxes.
Protect Aircraft Leasing Tax Deductions from IRS Hobby Loss Rule
Leasing out your aircraft can offer financial benefits, but it also brings tax challenges. Leasing brings into play the ugly hobby loss rule that can destroy all your deductions and also tax you on the gross income. This article explains how to navigate these rules and overcome common tax hurdles associated with aircraft leasing.
Avoiding Tax Pitfalls of Aircraft Ownership in an S Corporation
Are you considering owning an aircraft through your S corporation? Beware of tax pitfalls that could limit your savings. This article explores basis limitations, depreciation recapture, and cost-sharing issues, offering strategic tips to navigate these challenges and maximize your tax benefits.
What Happens When You Die and Your S Corporation Owns the Rental?
What happens when you have a rental property inside an S corporation and you die? First, you have the step-up in basis question. Second, you have the value of the S corporation for your heirs. There’s good news here. Check it out.
Reduce Taxes by Using the Best Cryptocurrency Accounting Method
At a time of surging cryptocurrency prices, many crypto owners are enjoying substantial gains. Where multiple crypto units are sold in the same year, taxable gains can be reduced by using a crypto accounting method that provides the highest possible tax basis for each unit that is sold. This ordinarily requires that crypto owners use a method other than the default method: first in, first out (FIFO).
Avoid the Hidden Dangers of the Accumulated Earnings Penalty Tax
The IRS can impose a 20 percent accumulated earnings tax on C corporations that retain too much in earnings to avoid issuing taxable dividends to shareholders. Corporations can avoid this penalty tax by retaining no more than the accumulated earnings tax credit, electing S corporation status, or retaining no more than necessary for reasonable business needs. Proper documentation is key to avoiding the tax.
Convert C to S Corp: Save Thousands and Avoid BIG Tax Problem
Want to convert your C corporation to an S corporation? You need a plan. No plan equals BIG (built-in gains) tax: 21 percent. Worse, you’ll continue to pay at your regular tax rates on the remaining 79 percent that flows from your S corporation to you. Make a plan to avoid as much of this torturous double taxation as possible, with the four strategies in this article.
July 2024
Claim Up to $32,220 in Missed 2021 Self-Employed COVID-19 Sick and Family Leave Credits Today
Individuals and partners who were self-employed during 2021 were entitled to claim refundable tax credits for sick and family leave if they were unable to work for various COVID-19-related reasons, such as suffering from COVID itself, getting vaccinated, being under quarantine, or looking after family members impacted by the virus. Those who failed to claim the credits with their 2021 tax return need to read this article. The credits can be worth up to $32,220.
1099s for Corporations and Other 1099 Surprises
Curious about when you need to issue a Form 1099 to a corporation? Discover the surprising details and specific reporting requirements for incorporated legal, medical, and other professional services.
Discover the Best Entity for Your Business: Use This Chart
Use this essential Entity Comparison Chart to find the right business entity. It simplifies complex information and highlights key advantages and disadvantages to help you make an informed decision and optimize your business’s financial health!
Know the 15 Exceptions to the 10 Percent Penalty on Early IRA Withdrawals
Early IRA withdrawals—those that occur before age 59 1/2—are generally subject to a 10 percent penalty tax, but 15 exceptions exist to avoid this penalty. The exceptions include withdrawals for substantially equal periodic payments, certain medical expenses, higher education costs, first-time home purchases, and specific emergencies or life events such as disability or terminal illness.
Make Sure Your Real Estate Options Pay Off
You may have heard that options are the perfect way to increase profits on real estate investments and rentals. Well, perfect is probably an overstatement, but good profits are available when you know what you are doing. You also need to know the tax rules to avoid any clauses, charges, and events that can turn options into sales—and trigger taxes when you least expect them.
Tax Deductions for Investments in Raw Land
Purchasing raw land is a great way to get into real estate investing. But your tax deductions are more limited than for improved property. Some expenses are deductible as itemized personal deductions; many others aren’t deductible at all. If you don’t itemize, you get no immediate benefit from your deductions. But if you make the proper annual tax election, your taxable profit will be reduced when you ultimately sell the property.
Deduct 100 Percent or 81 Percent of This Entertainment Facility?
When you qualify to deduct an entertainment facility as a business expense, how do you determine the amount to deduct?
Create Biz Deductions for Your Timeshare—Allow Use by Employees
You have two possible ways to let an employee use your timeshare, one of which is tax-free to the employee. The second method is to call use of the timeshare “compensation” to the employee, which produces the unusual result of taxable income to the employee in an amount often different from the tax deduction for the business.
Shutting Down Your S Corporation
Shutting down your S corporation? Discover the tax implications of selling your stock versus liquidating assets, and learn key strategies to minimize your tax burden. Read this article to unlock expert strategies that help you navigate this complex process with complete confidence.
June 2024
Q&A: Dutch-Treat Business Meals
You can deduct the cost of Dutch-treat business meals in the same manner you deduct other business meals. But all business meals you consume can suffer from the Sutter rule. Learn more here.
Cost Segregation: A Great Strategy When?
Residential rental property is depreciated over 27.5 years, and non-residential real property over 39 years, providing a relatively small deduction each year. But property owners can use cost segregation to speed up the deductions by separately identifying, valuing, and depreciating the personal property and land improvements contained in their property. This can provide a substantial deduction in the first year, especially if bonus depreciation and/or Section 179 is used to deduct the full cost of these assets in one year.
Shutting Down a Sole Proprietorship
When shutting down a sole proprietorship or a single-member LLC taxed as a sole proprietorship, there are myriad tax rules to consider because the tax code says you are not selling the business, but rather selling the assets of the business.
Q&A: Who Should Own the Business Car: Corporation or Individual?
Here’s a common question: Who should own the business vehicle? You? Your corporation? If you just formed your corporation, it’s likely that the vehicle is in your name. How does your corporation deal with it? This article gives you answers.
Q&A: Don’t Rent Home Office to S Corporation
One common mistake the corporate owner makes is renting the corporate office in the personal home to the corporation. Learn why this is a mistake.
Adding Clarity: Replace Roof, Write Off the Old Roof
Find additional clarity on how you benefit when you take advantage of the relatively new IRS tangible property regulations that allow you to write off replaced components. In this article, we expand on the benefits of the two types of tax savings that we covered in last month’s article.
Self-Employment Taxes for Active Limited Partners
The tax code says that limited partners “as such” don’t have to pay self-employment tax on their share of partnership income—a substantial tax savings. For the first time, the U.S. Tax Court has held that this exception applies only to limited partners who are passive investors, not active participants in the partnership business.
Tax Guide to Timeshare Tax Deductions When You Rent It to Others
Your timeshare can easily qualify as a second home for the mortgage interest deduction if you don’t rent or attempt to rent it. Once you introduce rent into your timeshare equation, you trigger two tough rules: (1) a special mortgage-interest-deduction rule for the personal part of the timeshare, and (2) the dreaded vacation-home rental rules for the rental part.
Q&A: How the IRS Disappears Tax Refunds on Unfiled Tax Returns
The taxpayer in this article did not file tax returns for 10 years. During this time, he overpaid his taxes by at least $100,000. The good news is that he does not owe any interest or penalties. But there’s some really bad news, too.
May 2024
Do You Need to Amend Your 2020 Tax Return for the 2020 ERC?
The time for individuals, including single-member LLCs taxed as sole proprietors, to get the 2020 Employee Retention Credit correct is here. And this is true even if you have applied for but not yet received the credit. For corporations and partnerships, the time may be past, but this article sheds light on what you need to know.
CPA Steals the Payroll Taxes, Owner Has to Pay the IRS
Who does your payroll? Could they embezzle the payroll taxes? What does the IRS do to you if someone embezzles your payroll? To find out, make sure you read this article.
Rental Property, Often Missed: Add New Roof, Deduct the Old One
Get ready to thank the IRS. With the relatively new tangible property regulations, you can write off replaced components and achieve two types of tax savings.
Tax Guide to Deducting Your Timeshare Stays as Business Lodging Costs
Could you use your timeshare for business lodging and other business purposes? If so, why should you consider it? Business deductions usually produce the best tax benefits, that’s why. Further, you need to know the special tax rules that can make your timeshare a rental property, personal residence, or business lodging facility.
Shedding Doubts about Selling Your Home to Your S Corporation
If you want to convert your home to a rental property, don’t. Instead, sell your home to your S corporation and then have the S corporation make the property a rental property. We have written about this previously, and we received some questions that we address in this article.
Q&A: No Business Income, No Home-Office Deduction: Wrong
If you have no taxable income, should you file a tax return and claim the office-in-the-home tax deduction? Answer: Yes. Even with no taxable income, you have two for-sure tax benefits from the home office, and you likely have a third benefit, as we explain.
Shutting Down a Partnership: Tax Implications
There is much you need to know when you shut down a partnership. In this article, we walk you through the tax consequences using the three most common partnership shutdown scenarios.
Did You Overfund a Section 529 Plan? Consider a Roth IRA Rollover
If you establish a Section 529 college savings plan for a child or other family member and he or she doesn’t use all the money or decides not to go to college at all, starting in 2024 you can roll over up to $35,000 of the money into a Roth IRA for the beneficiary. But such rollovers are subject to complex rules and require long-term planning, as we explain in this article.
