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Recent Feature Headlines


December 2016

2016 Last-Minute Vehicle Purchases to Save on Taxes

Here’s an easy question: Do you need more 2016 tax deductions? If yes, continue on. Next easy question: Do you need a replacement business vehicle? If yes, you can solve or mitigate the first problem of needing more deductions and solve the second problem of needing a replacement vehicle at the same time, but you need to read this article now so you know what you have to do and when you have to do it.


Alert: IRS Creates Clear Path to Rental Property Loss Deductions

If you own rental properties, you want to qualify as a real estate professional. It’s a big deal. In this status, you can deduct your tax shelter losses from your real estate rental properties against your business and portfolio income. We hear that the IRS and some tax professionals are misapplying the law and wrongly denying real estate professional status. That’s an ouch! How does it happen? By mistakenly requiring an election to count multiple rental properties toward the number of hours needed to be a real estate professional.


2016 Last-Minute Year-End Tax Deductions for Existing Vehicles

Yes, December 31 is just around the corner. That’s your last day to find tax deductions for your vehicles that will cut your 2016 taxes. And with our existing high tax rates, 2016 is a good year to cut your taxes. In this article, you can find and release tax deductions that the tax code trapped inside your existing business and personal cars, SUVs, trucks, and vans.


Do New Rules Allow You to Double Your Mortgage Interest Deductions?

Home mortgage interest deductions make homes more affordable and save taxpayers thousands of tax dollars each year. Now, if you are single, a new IRS decision creates the possibility for added savings—perhaps double—if you co-own a home or vacation property.


2016 Last-Minute Year-End General Business Deductions

This article takes your daily activity and identifies five easy year-end tax-planning strategies. Here are two examples from the article: prepaying your expenses under the IRS safe harbor and simply not billing customers and patients until 2016. These two strategies are certainly easy, as are the other three strategies in this article.


How to Deduct the Costs of Thinking about Starting a New Business

The government allows you to deduct and amortize a host of start-up costs and organizational costs when starting a new business. The tax rules in this area are unforgiving, meaning mistakes can prove costly. With proper planning, though, you can save money from your “thinking about it” costs and beyond.


2016 Last-Minute Year-End Retirement and Medical Tax Deductions

When you get busy with your business, it’s easy to forget about your retirement accounts and medical coverages and plans. But year-end is approaching, and now’s the time to take action to cut your 2016 taxes. This article gives you six action steps for 2016 that can help you reduce your taxes and pocket extra money.


Avoid These Traps and Cash In on Taxes When Your Business Loses Money

When your business loses money, don’t miss out on valuable tax savings by not filing a tax return that would qualify for a net operating loss deduction. This is one of four traps in the tax law that can cost you tax refunds from prior years and tax shelter for future years.


2016 Last-Minute Year-End Tax Strategies for Marriage, Kids, and Family

If you are thinking of getting married or divorced, you need to consider December 31, 2016, in your tax planning. Here’s another planning question: Do you give money to family or friends (other than your children who are under age 24)? If so, you need to consider the zero-tax-bracket planning strategy. And now let’s consider your children who are under age 18. Have you paid them for work they’ve done for your business? Have you paid them the right way? You’ll find the answers here.


Buying a Business: Should You Buy Ownership Interest or Assets?

When buying a business, you face many decisions. One such decision is whether you should buy the assets of the business or the ownership interest. Here, you have both legal and tax issues to consider. Also, depending on the entity you are looking at buying, the ownership purchase option may not be available.


2016 Last-Minute Year-End Tax Strategies for Your Stock Portfolio

Your stock market portfolio can represent a little gold mine of opportunities to reduce your 2016 income taxes when you take advantage of the tax code’s offset game. The tax code contains basic rules for this game, and once you know the rules, you can apply the correct strategies. In addition to saving taxes with the game of offset, you can also avoid paying taxes on stock appreciation by gifting stock to charity, your parents, and your children who are not subject to the kiddie tax.


Use the Foreign Tax Credit to Minimize U.S. Taxes When You Work Abroad

The tax law offers several ways to reduce or eliminate U.S. income taxes or foreign-sourced earned income. Picking the correct tax-reduction strategy based on your situation is the key to minimizing your U.S. income tax liability. In this article, you see common scenarios and options that show you how to pay the least amount of U.S. income tax on your foreign-sourced earned income.


2016 Last-Minute Business Motor Home Purchase

A business motor home could provide both big tax deductions and an ideal solution to your business lodging and transportation needs. You would know how clean your sleeping room is. You would know the room’s smoking history. You would know how many pets, if any, have graced the premises.


Want to Leave the U.S.? You May Have to Pay These Taxes

Planning on leaving the U.S.? If so, you have two choices from a tax perspective, but neither is painless. The tax law that applies to foreign living and expatriation can be tricky, so it’s essential that you depart the country correctly.




November 2016

How to Travel to Exotic Locations Using the Seven-Day Travel Rule

When you travel outside the 50 states and the District of Columbia, you can use a special seven-day travel rule to deduct your business transportation costs to and from that business destination even when you work only one day during that trip. The special rules that apply to this seven-day travel are clear and easy to understand.


Tax Code’s Officially Designed “Rent-to-Own Your Home” Program for Investors and Renters

In this official tax code program, the landlord-investor benefits because he has no vacancies, few hassles, no management fees, and a known cash flow. The tenant-investor benefits because he gets into this home with little or no down payment, builds equity while paying rent, and gets detailed knowledge about the property while living there. At some agreed-upon future point in time, the landlord-investor sells his or her interest in the property to the tenant-investor or the two of them sell the property to a third party.


Q&A: IRS Allows Switch from IRS Mileage Rate to Actual Expenses

 


IRS Expands Tax-Deductible Meetings and Seminars Boondoggle Areas

Tax law places all conventions, seminars, and similar meetings into one of two areas: (a) inside or (b) outside the North American area. When you are outside the North American area, the rules do about everything possible to make your convention, seminar, or similar meeting nondeductible. So, if your group is not a worldwide group, attend conventions, seminars, and similar meetings only in the tax law-defined North American area. (Don’t worry, you’ll find many great locations in the tax code-defined North America area.)


Learn a Simple Strategy for 100 Percent Tax-Free Rental Income

The government taxes rental income just like any other income. However, a little-known loophole in the tax law may allow you to completely exclude some rental income from your income taxes. The requirements to qualify are simple, but there are some issues that could complicate your ability to use this loophole.


Three Strategies to Beat the Hobby Loss Rules

When you have a side business that produces a net loss, you automatically get to use that loss to lower your taxable income, right? Not so fast! The IRS could destroy those losses (and more) with one of the nastiest tax laws out there—the hobby loss rule. With an activity that’s showing losses, you need strategies to ensure your loss deductions.


Choosing the Right Entity for a Newly Acquired Business (Part 2)

In this part 2 article on choosing the right entity for your newly acquired business, you learn how the three possible corporations work and the advantages and disadvantages of each. In part 1, published last month, you learned about proprietorships and single-member LLCs taxed as proprietorships.


Two Special Tax Breaks for Retailers Who Improve Their Property

If you’re in retail, you know how useful a renovated, polished store can be in gaining the trust of your customers. Fortunately, restorations and upgrades to your property became far more financially achievable following a law Congress passed last December. Under the new rules, when you make qualifying improvements to your store, you can immediately or quickly write off much of the expense—even if the improvements cost hundreds of thousands of dollars.




October 2016

Earn Big Returns with Self-Directed IRAs, but Tread Carefully

As a successful entrepreneur, you’re used to managing every aspect of your business. So it makes sense to pick a retirement plan like a self-directed IRA that gives you virtually unlimited discretion in your investment choices. But when you take this route, be very careful! You need to know the rules of the road, or you could trigger the collapse of your IRA and incur a retirement-ruining tax bill.


Three Strategies That Avoid 1099 Reporting and Penalty Headaches

Lawmakers make business owners report to the IRS certain payments made to workers such as payments of $600 or more to independent contractors. The rules and deadlines for reporting independent contractor payments on Form 1099-MISC can be tricky. But when you know the rules, you can employ strategies that minimize the impact of these reporting requirements on your business.


Business Tax Deductions with Section 127 Plan for Child’s College

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 who is age 21 or older in financial need of educational assistance, this is a plan to consider.


Sample Educational Assistance Plan

As a member, you may download this sample Section 127 educational assistance plan in Microsoft Word format. Then, simply modify the document for your business or tax practice use.


Q&A: Biggest 2016 Vehicle Deductions

 


Uncover New, Big 2016 Tax Breaks for Your Commercial Properties

The Protecting Americans from Tax Hikes (PATH) Act enacted last December created a new (somewhat hidden) tax break when you make improvements to your nonresidential property. Nonresidential property is any real property you don’t use for dwellings, such as offices, stores, warehouses, hotels, and motels. Don’t be one of the thousands who overlook this new tax break. It’s easy to qualify for, and it can put big, immediate dollars in your pockets.


Choosing the Right Entity for a Newly Acquired Business (Part 1)

When you start a business either from scratch or by purchase, you need to consider the business entity in which you will operate. In this article, we discuss the sole proprietorship and the single-member LLC as possibilities. Both of these entities offer income tax simplicity.


Q&A: Does Grouping Release Prior Suspended Losses?

 


Pay Foreign Taxes on Investment Income? Reduce Your U.S. Tax Bill

If you have investments that generate foreign income, including U.S. mutual funds, you likely pay foreign taxes on that income. You can use one of two methods to reduce your U.S. taxes for any foreign taxes paid, and one method generally leads to a greater tax savings than the other. Not maximizing this benefit can cost you thousands in extra taxes over the years.


Start-ups: New Bang for R&D—Save More as an S Corporation

Small start-up businesses have an unprecedented new way to save money, and it does not involve income taxes. The new way to save money is on your payroll taxes. How? By applying research and development credits to your payroll tax bill.




September 2016

Is the New 54-Cent IRS Mileage Rate a Rip-Off or Does It Help You?

To know if you are money ahead deducting your business vehicle using the IRS mileage rate or the actual-expense method, you need to use our magic calculator. Tax software used by tax professionals and consumers compares the first-year deductions only, and because of the wide variation in first-year deductions caused by the luxury vehicle limits, bonus depreciation, and Section 179 expensing, the first-year-only comparison is going to produce inaccurate results.


Unpaid Payroll Taxes? Four Ways to Defeat the Trust Fund Penalty

Business owners and employees who do not pay their payroll taxes can find themselves personally liable for the trust fund portion of those taxes. This is true even if the business operates as a separate legal entity such as a corporation. If you are a business owner or employee in trouble with the IRS over unpaid payroll taxes, you need to consider strategies you can use to stop the IRS from assessing the trust fund penalties against you.


Q&A: Hiring Your Dependent Children

 


Beware When Gifting Business Property

You need to know, and avoid, tax-problem surprises when you gift business property to your parents, children, or others. With the wrong method, you can toss tax-deduction benefits into the trash. You can easily suffer recapture. Don’t let your gift of business property surprise you and take money out of your bank account.


Q&A: Section 105 Plan (an HRA) for a Rental Property Business

 


Accelerated Tax Deductions for Qualified Leasehold Improvements

If you own tax code-defined nonresidential property (otherwise known as commercial property), you have to like The Protecting Americans from Tax Hikes (PATH) Act enacted last December. The PATH Act put three huge nonresidential property-qualifying leasehold improvement tax breaks in place through 2019.


Selling a Business: Who Owns the Goodwill? Does the 3.8% NIIT Apply?

When it comes time to sell your business, it’s likely that you need to consider the intangible asset of goodwill. You have several things to consider, depending on the business entity you used to operate your business. For example, if you operated as a C corporation, how do you avoid double taxation on the goodwill? This article shows you how. Regardless of entity, how do you avoid the net investment income tax (NIIT)? This article shows you how.


Comments from Readers on Last Month’s Tax Cheat Article

 


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 clauses, charges, and events that can turn options into sales and trigger taxes when you least expect them.