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.
December 31 is just around the corner. That’s likely your cutoff date for finding tax deductions that will cut your 2014 taxes. And remember, your 2014 taxes are the highest they’ve been in 28 years. This article helps you identify tax deductions embedded in your existing business and personal cars, SUVs, trucks, and vans.
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. This article gives you seven action steps that help you reduce your taxes, pocket extra money, and get ready for 2015.
This article gives you easy year-end tax planning strategies for your everyday business. For example, prepaying your expenses under the IRS safe harbor and simply not billing customers and patients until 2015. These two strategies are certainly easy, as are the other three strategies in this article.
Your stock market portfolio is a great place to look for year-end tax planning opportunities. First, it’s a place where you can avoid paying taxes on stock appreciation by gifting stock to charity, your parents, and your children. Second, it’s a place where you can play a simple game of offset where you cancel out high taxes. This article gives you seven strategies that reduce your taxes and make you smile.
In your last-minute search for tax deductions, examine your children under the age of 18, your marital status, and your relatives in the zero tax bracket. With some planning, you can save good tax money here.
It’s November. It’s also the beginning of year-end tax planning time. And for many business owners, it’s car, truck, van, and SUV buying time. The combination of car, truck, van, and SUV buying time and year-end tax planning can help you make a sizable dent in your 2014 tax burden. And if lawmakers get their act together, they could further increase your tax benefits before December 31.
You can use a motor home for your business. If you are thinking of buying a motor home at this time, your Section 179 expensing election is somewhat in limbo. It’s possible that lawmakers will reinstate last year’s limits on Section 179 expensing. This article examines the gamble you take if you buy before lawmakers take action or if they fail to reinstate last year’s limits.
When you take a trip and spend some of your time on business and some time on personal activities, how much of your expenses can you deduct? What happens to your expenses on holidays? Knowing the answers to questions such as these puts money in your pocket and safeguards you from IRS attack on your travel deductions.
If you operate your business as a sole proprietorship, the government takes a big chunk of your profits in the form of self-employment taxes. But there’s good news. With the help of your spouse, you can reduce your self-employment tax bill by using a simple rental strategy.
Would a unique downtown historic building be the perfect site for your office? It may be more affordable than you think. Your state and federal governments want you to rehabilitate these buildings and give you a financial incentive to do so. Here is their offer to you: if you invest in and restore a historic building, the governments will give you tax credits to offset a huge chunk of the cost of restoration.
The Affordable Care Act allows you to pay for employee insurance by increasing taxable compensation. But that’s not the route you want to take, since it means more taxes for both you and your employees. This article gives you ideas on how to pay for employee insurance without hiking up your tax bill.
You normally would not expect to have more money in your pocket after you pay your tax bill. However, with this new ruling from the IRS, you could end up with just that—a negative tax on the sale of your home! Read this article to find out how a taxpayer sold her home for a $100,000 before-tax profit and turned that into a $110,000 after-tax value.
The number one way for S corporation owners to pay fewer taxes is to set the right salary. To do this, you want to find the salary sweet spot—an amount that is low enough to save you taxes but high enough to satisfy the IRS and not create a risk of audit. This article summarizes the important cases and rules you need to know in order to determine the right salary for your business.
Have you ruled out taking the home-office deduction because you believe your home is too small? You should think again. You can set up a mini home office using as little as a single square foot of floor space. When you read this article, you’ll see why this could generate thousands of dollars in tax savings.