By month:February 2015
Giving to charity is a noble act no matter how you choose to give. But for purposes of tax savings, some forms of giving are much more beneficial to you than others. As a business owner, you can turn your charitable contribution into a business expense. While this does not change anything from the charity’s perspective, this hugely increases your tax savings.
Your trip from home to the office each day certainly feels like part of your workday, but it’s not—at least according to the IRS. Unless you fall into certain exceptions, your commute creates personal mileage, which is not deductible. But there’s a solution, and it’s so easy that if you don’t do it, you’re simply giving money to the government that you could keep for yourself.
Would you like to use a Roth IRA for your retirement investments, even though you make too much money to contribute to the account directly? You can. Congress has “accidentally on purpose” created loopholes to allow even high-income earners to contribute to Roth retirement accounts. But you can’t contribute directly. You have to bring your money in through the back door.
As the sole shareholder of your S corporation, you may face a situation where you need to purchase a business vehicle in your personal name rather than through the corporation. When this happens, you need to do some tax planning or you could miss out on beneficial business deductions, such as Section 179 expensing and bonus depreciation.
Lawmakers may not always make your life easy, but at least you know they want you to have fun every now and then. The tax code gives you a 100 percent deduction for the parties that you throw for your employees—as long as you invite the right kind of employees.
Your rental property is worth more to you than simply the generation of rental income. Your property may also create tax losses that you can use to offset your income from other sources. It’s not as easy as it used to be to make your rental property a legal tax shelter, but you can still do this if you put in the right number of hours toward the right type of work.
2015 is the first year that stockowners can sell their C corporation stock completely tax free under Section 1202 of the tax code. If you started a C corporation or purchased stock recently and you qualify for this rule, you need to determine the date you acquired the stock and wait five years before you sell. This waiting period could save you thousands and even potentially millions of dollars in taxes.
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