CPA subscriber points out that for the Section 105 medical reimbursement plan to work, marriage is not required.

The W-2 mortgage loan officer in this tax case beat the alternative minimum tax (AMT) by winning his claim that, in spite of his W-2, he was an independent contractor who should report his business expenses as a proprietorship on Schedule C of his Form 1040.

Because you are in business, you likely have the opportunity to improve your tax deduction for long-term care insurance. In fact, you might achieve a 100 percent deduction. If you are married, the 100 percent deduction can include your spouse.

This subscriber owns a timeshare that he is not going to use this year. He wants to know how he can obtain business tax deductions if he lets his employees use it, assuming the employees do some good work. He learns that he has two possible ways to let an employee use the 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.

You might justify a zero salary to the owner of an S corporation in the right circumstances. But there are some pitfalls, particularly if your purpose is to avoid payroll taxes. Further, and this is often overlooked, state law can come into play on the zero-salary game.

Do you operate your business as a corporation, an LLC, or a proprietorship? Your choice of entity impacts a variety of tax deductions, and now the cell phone creates a win for the corporate owner and a loss for the proprietorship and the single-member LLC.

The IRS admits that its regulation that made the single-member LLC a corporation for payroll tax purposes is unfair to small business family employment. To right this wrong, the IRS allows the single-member LLC to use the family employment rules to exempt FICA and Medicare taxes retroactively to January 1, 2009. The regulation granting this change expires on or before October 31, 2014.

Is your worker an independent contractor or an employee? You want to get this right at the beginning. But if you improperly classified an employee as an independent contractor, the IRS has a tax penalty relief program for you. Should the IRS plan not have the best relief for you, consider the Section 530 employer protection plan.

In the right circumstances, the single-member limited liability company (LLC) gives you corporate liability protection combined with easy Schedule C (proprietorship) rules for your tax return. In this article, you learn the two tax advantages and two tax disadvantages to the single-member LLC.

Tax law makes it hard for the owner of an S corporation to win deductions for his health insurance. First, the corporate-provided health insurance is not a tax-free fringe benefit for the owner. Second, the S corporation has to pay for the health insurance or the owner will suffer a loss of tax deductions. Third, the S corporation payment for the health insurance will produce wages either exempt or nonexempt from FICA and Medicare taxes. This article shows you how to make the three tax deduction rules work for you.

Many small businesses underutilize tax deductions for de minimis fringe benefits. The beauty of the de minimis classification is that the business gets the tax deduction and the employee gets the benefits tax-free. This makes for happy owners and employees.

Your business ownership creates an opportunity for a tax plan that can give you tax deductions for hiring your children and can give your children tax-free income. But your tax plan does not stop there. Your children might start Roth IRAs where they can invest their tax-free income in a college fund. Done right, as described in this article, the government pays you for your help with this plan.

Does your chart of accounts contain two categories for your business entertainment tax deductions? It should. Your tax deduction for an employee party goes into a different deduction category from your regular business entertainment. Learn about the two accounts and how to get more tax deductions when you party with your employees.

The courts have determined that the alternative minimum tax (AMT) cheats many commissioned W-2 employees out of their rightful deductions. To fix this problem, the courts have allowed certain commissioned W-2 employees to move their employee business expenses from the IRS Form 2106 itemized deduction category to the tax-advantaged sole proprietorship on Schedule C.

The defined benefit retirement plan might be your choice of retirement plans if you are age 50 or older and your business earns a healthy income.

You are not self-employed for tax purposes just because your employer says so. This is true even when your employer is the British consulate general.

The single-member LLC is a disregarded entity for federal income tax purposes, but a corporation for employment tax purposes.

Setting the owner of an S corporation’s salary so that the owner saves money on self-employment taxes requires attention to some details. This article shows how a CPA with S corporation earnings of $246,000 had a reasonable salary of $91,000 according to the IRS. If you follow the principles used by the IRS to identify the $91,000 salary, you build audit-proof support for the salary.

This is the second article in our series on the best small-business retirement plans. Here we identify the four major advantages and three disadvantages to the SEP.

You need preventative steps to ensure that you are paying the wages you think you are paying to your employees and that your payroll tax deposits are actually being sent to the IRS and not to an embezzler’s pockets.

Learn why it is important to get the independent contractor classification correct. If your supposed contractor status is in reality employee status, you suffer major penalties.

The new under-age-27 health insurance coverage grants windfalls, pitfalls, and planning opportunities.

Tax law creates trouble for selected fringe benefits that the S corporation gives to a more than 2 percent shareholder. The loss of benefits and accompanying complications are factors to consider in the selection of the S corporation as your choice of business entity.

Do you provide supper or other meal money when you require your employees to work overtime? If so, is the meal money a tax-free fringe benefit or is it additional W-2 compensation to the employees?

Under the right circumstances, you can provide tax-free lunches to your employees. That’s nice. But what about you? How do you, the business owner, qualify for this tax-free fringe benefit?

When the S corporation makes HSA contributions on behalf of its more than 2 percent shareholder-employee, the S corporation treats the contributions as compensation to the shareholder-employee. In turn, the shareholder-employee has a deductible HSA on his or her personal tax return.

Tax law grants tax-free income status to the proceeds from income replacement disability insurance policies. You pay a price for this tax-free income: You may not deduct the premiums. Special treatment applies to overhead disability and also S corporation payments on behalf of “more than 2 percent” shareholders.

Many one-owner and husband-and-wife-owned businesses opt for discriminatory health insurance plans for their businesses. The new health care law eliminates that discrimination for new plans but allows grandfathered plans to continue as before.

If you operate your business as a corporation but own the business car personally, your best result comes about when you have your corporation use an accountable plan to reimburse you for actual expenses, including depreciation and Section 179 expensing.

When the IRS invites you for a tax audit, the examiner does not know that you hired your children. This fact surfaces during the initial interview or survey process, and the IRS instructs its examiners to examine this hire closely. You avoid all the problems when you have the right records.

When your S corporation employs a relative, you need to be aware of the stock attribution rules that can wreak havoc on the health insurance fringe benefit.

Tax credits are a true incentive for the business owner. They reduce taxes dollar for dollar. Now, you have waiting for you a hefty 35 percent tax credit on small-business health insurance coverage for employees. Here are the rules you need to know.

The new health care law grants a nice tax credit to business owners who cover their employees. How about the owners themselves? Lawmakers did them no favors, but one group of proprietors might catch a break.

For business owners who have children ages 22, 23, 24, 25, and 26, the new health care bill contains a healthy break, and perhaps even better than that. Amend Section 105 plans now for this new provision. Download your sample plan from this article.

Learn how the government pays you to get educated. The basic rule: you may deduct education that maintains or improves the skills you need in your business, providing the education does not qualify you for a new business.

If you are thinking of hiring your workers as 1099 independent contractors, this article is for you. The article shows you how the rules work and helps you understand what you need to properly classify your workers as independent contractors.

The business bad debt generates the best bad debt tax breaks, except when the debt is incurred to protect, enhance, or continue your employee relationship (i.e, keep the corporation in business so you have a place to work).

Do you own a business that withholds taxes from employees? If so, you need 100 percent certainty that the withheld payroll tax monies are going to the IRS. You can achieve 100 percent certainty with the IRS EFTPS registration..

You can use the transportation fringe benefit in lieu of wages. In fact, you can ask the employee to take a pay cut equal to the transportation fringe benefit. Amazingly, this swap of a pay cut for the transportation fringe benefit works out to give the employee an after-tax cash raise in pay and it puts cash in your pocket too.

You can use a Section 127 education plan to obtain tax benefits for yourself (or your corporation) while you help your grandchild through college or other learning.

Establish a Section 127 educational assistance plan in your business to help pay your age 21 or older child’s college or other education costs. If you are in business and you have a child that’s age 21 or older in financial need of educational assistance, this is a plan to consider.

As a subscriber, you may download this sample Section 127 educational assistance plan in Microsoft Word. Then, simply modify the document to your business use.

Most entertainment deductions are cut by 50 percent when you complete the tax return. Tax law grants a number of exceptions to the 50 percent cut. One exception eliminates the 50 percent and grants a 100 percent deduction to the party, facility, or entertainment that is primarily for the benefit of employees.

Use this Section 105 medical reimbursement plan template to make sure you provide maximum medical benefits to you and your family while legally discriminating under both tax law and ERISA rules.

You may deduct travel, meals, and lodging in an unsuccessful attempt to hire an employee.

New tax rules have pretty much killed the once-common tool and car allowances as expense reimbursement methods.

The dreaded alternative minimum tax (AMT) taxes the regular tax deductions claimed for employee business expenses. These taxpayers said, “enough” and took their cases to court where they won their deductions by claiming employee business expenses on Schedule C.

You may deduct coffee and sodas in the workplace, as long as you file them correctly.

As a surgeon, you might get malpractice tail insurance (insurance that covers malpractice claims should you quit and go to another hospital). We suggest having the hospital pay the insurance costs, even if they deduct your pay, to protect yourself from the AMT.

Save yourself time and trouble. Reimburse employees for actual expenses. Forget those two troublemakers: per diems and allowances.

Save yourself time and trouble. Reimburse employees for actual expenses. Forget those two troublemakers: per diems and allowances.

Many people, through keen knowledge of the tax law, have been able to use the law to their advantage and buy personal aircraft. Unfortunately, lawmakers changed the rules for deducting personal aircraft. We summarized the new rules for you.

Incorporated and unincorporated businesses can use the solo 401(k) to benefit the owner (including a husband and wife). In most cases, the solo 401(k) allows the one-owner or husband-and-wife owners to put away more than they could in other plans (up to $49,000 this year, depending on age and earnings—adjusted for inflation in future years).

This new law requires that you look at your retirement plans through new eyes. Caution is one watchword here. You have much to consider, including how to obtain a strong rate of return on your retirement assets and factors outside your control like the pension bailout of the airline industry. With the new rules, the 401(k) looks better and better, especially if you have employees.

The expansion of the kiddie tax to children under the age of 18 has zero negative effect on the hire-your-child strategy.

When designing the medical plan, you need to consider all your and your spouse’s proprietorships, LLCs, and corporations as one business. If employees exist in one of these businesses, you have employees in all businesses. Plan your discrimination or nondiscrimination accordingly.

The W-2 reporting requirements exempt the Section 105 medical plan reimbursements from entries on the W-2.

You often have many alternatives when it comes to pension coverage for you and your employees. This is an area where you should speak with several individuals, including your tax advisor and life insurance agent, before making a decision.