Whether or not you complied with Obamacare last year, we have some big news for you. It’s no problem, compliance or not, and either way the news is big for two reasons. First, if you failed Obamacare compliance in 2014, the IRS likely just released you from the monstrous $100-a-day penalty. Second, if you did it right, you may have overtaxed your employees and now, with the new IRS guidance, you can undo that overtaxation.
A November 2014 FAQ from the Department of Labor created quite a scare for S corporation owners, raising the possibility of huge Affordable Care Act (ACA) penalties simply for deducting your health insurance premiums according to IRS guidelines. However, a recent IRS notice explains how you can now safely avoid these penalties and claim your rightful deductions.
Lawmakers did it again. They retroactively reinstated a number of so-called extender laws, including those tax-favored Section 179 expensing and bonus depreciation deductions. Did you buy vehicles and equipment last year? If so, this new law can make you smile, as this article shows it did for Harry Spencer.
Before you sell or trade your business vehicle, take a minute to think. The actions you take now could come back to haunt you at tax time. You could be creating extra tax for yourself or missing out on tax losses that you could use to offset other income. We’ll tell you what you need to know to be sure you make the right decision.
If you put your kids to work in your business, you can use their compensation to create nice tax savings for yourself. This strategy lets you spend time with your children during the workday and teach them valuable lessons about working life—as well as valuable lessons about money and tax planning.
In a previous edition of the Tax Reduction Letter, we explained how you get business deductions for the cost and laundry expenses of work clothes you buy for yourself and your employees. This update explains how you still get your full deduction even if you do not provide this benefit to all employees.
Trust, but verify. That’s the motto you should have when it comes to your payroll tax payments. You likely have a professional or business associate take care of your tax filing and payments. But you could save yourself a lot of trouble down the road by knowing how to verify that your trusted associate has done what he or she claimed to do.
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.
Sometimes it feels like the IRS wants everything from you, including the shirt off your back. At the Tax Reduction Letter, our team of researchers works every day to find ways to protect you from government overreach. We’ll be sure to help you keep your money—and even give you a deduction for that shirt on your back! Read this article to find out when the IRS allows you to deduct the clothes you wear in your business.
If you discriminate when you contribute to the health savings accounts (HSAs) of your employees, the IRS will make you pay a 35 percent tax on the total amount of your contributions. This tax can add up quickly, and if you have to pay it, you’ll kick yourself when you discover you can escape the tax entirely by following the three rules in this article.
If you want to file your taxes for last year (2014) as an S corporation for the first time, you might be surprised to discover that the deadline to elect S corporation status has long passed. But if you didn’t file your election in time, don’t despair. By following the rules in this article, you can retroactively create your S corporation well after the deadline and get the full benefit of your tax savings.
The next time you plan a vacation, stop and think about how you could make it deductible. If you find a good business reason to visit that destination and you throw in enough business hours on the trip, you suddenly convert a nondeductible personal trip into a deductible business expense.
Twenty years after the Tax Court approved a strategy that grants you extra deductions for your second home, the IRS would like you to forget it ever happened. Even though the case remains current law, you won’t find any mention of this strategy in IRS guidance to taxpayers. Unless you just happened to know old cases—or read this article—you might never have known how you could save thousands in taxes on your second home.
If your doctor recommends that you buy equipment for your health, pay attention. First of all, you should follow your doctor’s orders. But just as important, you may be able to deduct some or all of the cost. This article explains how the one-owner businessperson is in the best possible position to deduct the cost of medical equipment.
The IRA double-win strategy allows you to get a tax benefit when you first contribute to your retirement plan and then again when you withdraw the money. This article reviews how the strategy works and answers some member questions we received regarding the process.
If you are a regular reader of the Tax Reduction Letter, you know that you can use a Section 125 plan to save money on group health insurance. A number of subscribers have requested a template for how to set up one of these plans, and that’s what this article is all about—we’ll help you get your plan up and running.
The IRS lifted its long-standing ban against deductions for local lodging expenses. Now you can deduct the cost of a hotel for yourself or your employees even if you’re staying near your home. But there are three rules to know to make sure that your expense falls within the IRS “safe harbor” for deductibility.
The IRS is more than happy to take away your deductions for your vehicle’s operating expenses if you do not follow their perfectionistic standard of record keeping. But you can beat them at their own game. This article shows you the easy way to satisfy even the most demanding of IRS agents when it comes to proving the usage of your business vehicle.
You enter a muddy legal area when you claim a home-office deduction in connection with your rental properties. Why? You must prove that you operate the rental properties as a trade or business. This article shows you the best way to meet that “trade or business” test and safeguard your deductions (and escape self-employment tax in the process).
There are special rules that you need to know regarding the deduction of your net losses if you co-own or co-manage a business or investment with your spouse. Tax law gives you some nice advantages, but they’re not what we would call logical. If you don’t know how the rules work, you might be missing out on money-saving benefits.
Your traditional IRA comes with a looming tax bill. Sure, you deduct your contributions, but you have to pay tax on 100 percent of the money you eventually withdraw. Fortunately, the tax code gives you a great year-end planning technique that you can use to minimize this future tax. You can strategically roll your traditional IRAs forward (and backward) to Roth IRAs, which allow you to withdraw qualified distributions tax-free.
If you own stock, you can take action now to escape the tax that you will incur when you ultimately decide to sell. By strategically timing sale and repurchase transactions, you can take advantage of the zero percent bracket for capital gains and gradually eliminate most or all of your tax before you ultimately dispose of the stock.