By topic: Fringe benefits

Deduct 100 Percent of Your Business Meals under New Rules

Congress wanted to help restaurants due to the COVID-19 pandemic, so they created a special rule that allows you to deduct 100 percent of most of your restaurant business meals for tax years 2021 and 2022. You can take proactive steps now to ensure all your business meals going forward qualify for this 100 percent deduction. Here’s a hint: if you are deducting per diem amounts for your business travel meals, you’ll lose out.

FREE PDF Download: The Practical Guide to S Corporation Taxes

Do you operate your business as an S corporation? It’s a popular choice due to the tax savings you benefit from. But if you don’t avoid the pitfalls, you risk losing those valuable tax benefits. Download this guide to maximize your S corporation tax savings and avoid common missteps.

COVID-19 Relief Law Boosts Temporary Tax Deductions and Credits

Lawmakers passed significant COVID-19 relief legislation in December 2020. As part of this relief package, there are many tax changes that impact tax years 2020 and 2021. The changes put cash in your pocket. You will want to learn about them so you can use them to your advantage.

FREE PDF Download: Slash Business Taxes with the Help of Relatives

Do you own your own business? Do you have close relatives? If you responded yes to both, you have a golden opportunity to slash your business taxes. With the help of family members, you can utilize several tax-saving strategies to reap some nice financial benefits for both you and your relatives.

2020 Retirement Plans Desktop Reference for One-Person Businesses

Download your PDF copy of the 2020 retirement plans desktop reference for one-person businesses.

Be Sure to Pay the PCORI Fee if You Have an HRA

Business owners who have established 105-HRAs, Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs), and Individual Coverage Health Reimbursement Accounts (ICHRAs) to reimburse their employees for medical expenses need to pay an annual fee to help support the Patient-Centered Outcomes Research Institute (PCORI).

Section 83(b): Restricted Stock Awards and Your Taxes

When you receive restricted stock awards, you need to decide whether you want to make a Section 83(b) tax election. In this article, we explain the nuances to the Section 83(b) election.

Retirement Plans Desktop Reference for One-Person Businesses

Download your PDF copy of the retirement plans desktop reference for one-person businesses.

2019 Last-Minute Year-End Medical and Retirement 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. This article gives you six action steps for 2019 that can help you reduce your taxes and pocket extra money.

Federal Tax Deductions for Section 127 Education of Grandchild

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

Q&A: No FICA on Health Insurance for the More-Than-2% Shareholder-Employee

There’s no excuse for it, but how to treat the payroll taxes (Social Security, Medicare, and federal unemployment taxes (FUTA) when the S corporation pays for or reimburses health insurance for the more-than-2-percent shareholder-employee sits in muddy waters—but perhaps only until you read this article.

Creating More Business Meal Tax Deductions After the TCJA

If you have been looking for some good news on tax-deductible business meals, you will find it in this article. And along with the good news, you will find clarity as to what post-Tax Cuts and Jobs Act rules currently apply to your tax-deductible business meals.

How to Deduct Cruise Ship Conventions, Seminars, and Meetings

If you want to attend a convention, seminar, or similar meeting onboard a cruise ship and deduct all your costs, you face some very special rules. It can be done. But when you know the tax code rules, you will find an enlightened workaround that removes almost all the hassle and gives you what you want.

Avoid This S Corporation Health Insurance Deduction Mistake

If you own more than 2 percent of an S corporation, you have to follow special rules to deduct your health insurance premiums. The health insurance rules can also apply to family members who work in the business and don’t own a single share of stock. Don’t let the zero stock be a surprise and cost your family money.

How to Reimburse Medicare When You Have Fewer Than 20 Employees

The Affordable Care Act’s $100-a-day penalty for improper medical reimbursements likely has your attention. It should. But you can find many reimbursements that are allowed without penalty, including the ability to reimburse Medicare when you have fewer than 20 employees.

How to Deduct Medicare as a Business Expense

When you are in business for yourself, you have options when it comes to creating tax deductions for your health insurance. The tax rules treat Medicare as health insurance, and that means you have options for how to create your tax deductions for Medicare.

IRS Issues Final Section 199A Regulations and Defines QBI

Your ownership of a pass-through trade or business can generate a tax deduction of up to 20 percent of your qualified business income (QBI). The C corporation does not generate this deduction, but the proprietorship, partnership, S corporation, and certain trusts, estates, and rental properties do. In this article, you learn how to find your QBI.

Q&A: Avoiding the $100 a Day per Employee Penalty for S Corporations

The answer in this article explains how the S corporation can pay the solo owner-employee’s individually purchased health insurance without worrying about the $100-a-day penalty.

IRS Updates Defined Wages for New Section 199A Tax Deductions

Your Section 199A tax deduction disregards W-2 wages when your Form 1040 taxable income is equal to or less than $315,000 (married, filing jointly) or $157,500 (filing as single or head of household). Also, you don’t have to think about wages for your out-of-favor business if you have taxable income above $415,000 (married, filing jointly) or $207,500 (filing as single or head of household). But if you are in a group that needs to consider the wages your business paid you and your employees, you have to follow the rules set out by the IRS, as we explain in this article.

Update on Claiming Business Deductions for Work-Related Education

Learn how your continuous learning employees probably suffer because of the Tax Cuts and Jobs Act. It’s likely good business for you as a business owner to ease that suffering to encourage this continuous learning. On the personal side, you’ll find the tax law subsidies for your individual education to your liking.

IRS Says TCJA Allows Client and Prospect Business Meal Deductions

You are not going to do this very often, but thank the IRS for showing you the path to your client and prospect business meal tax deductions. Remember, the Tax Cuts and Jobs Act eliminated tax-deductible entertainment, so the IRS’s new client and prospect business meal rules are important.

Q&A: Health Insurance Premiums and Reasonable Compensation

Your S corporation has to pay you reasonable compensation for the services you provide to the corporation. If your corporation pays your health insurance premiums, does that change the salary amount you need to pay yourself? We’ll tell you the answer and how doing it wrong would cost you money.

Claiming the New Employer Tax Credit for Family and Medical Leave

In many business environments, you compete for employee talent in a variety of ways, including perhaps by implementing a medical and family leave policy. The good news on this front is that your federal government may have given you a tax credit (yes, that lovely dollar-for-dollar offset to your taxes) for what you wanted to do anyway.

Bird’s-Eye View of Tax-Deductible Small-Business Health Plans

Are you confused by the tax deductions you can claim for your small-business health care? We can help you with our bird’s-eye view. It takes less than two minutes.

Avoid Penalties—Give Notice of 2019 HRA Medical Plan on Oct. 2

You have three good reasons to get your qualified small-business health reimbursement account (QSEHRA) in place on or before October 2. First, this avoids penalties. Second, your employees will have the time they need to select health insurance. Third, you will have your plan in place on January 1.

What Did the TCJA Do to Your Tax-Free Supper Money?

The Tax Cuts and Jobs Act (TCJA) changed the landscape for a host of business meal and entertainment deductions. For supper money, the TCJA did damage, both short and long term. But the deduction continues in place, albeit damaged, for tax years 2018 through 2025.

Beware: Conflicting IRS Rules for Deducting Your Business Gym—Don’t Use the Wrong Ones

If you are thinking of a gym for your employees, this is the article for you. The article keeps you from using the wrong set of IRS regulations. Yep, there two different sets of regulations from two different code sections that could apply.

S Corporation Fringe Benefits after the Recent Tax Reform

More than 2 percent shareholder-employees of S corporations don’t catch a lot of breaks when it comes to the taxation of fringe benefits. But arming yourself with the correct information will help you maximize your deductions and avoid costly penalties.

Tax Reform Imposes a Penalty Tax on Transportation Fringe Benefits

The old saying that “no good deed goes unpunished” could certainly apply to the transportation fringe benefits that lawmakers penalized with the recent tax reform.

Yes, Tax Reform Did Kill Prospect and Client Meal Deductions

You asked us to elaborate on how tax reform did away with client and prospect business meals. It starts with the Tax Reform Act of 1986, when business meals were by law placed in the entertainment category. As you know, so-called business-friendly tax reform killed deductions for business entertainment and, along with it, client and prospect meals.

Tax Reform Wipes Out 50 Percent Business Entertainment Deductions

Lawmakers finally did it. First, they reduced the directly related and associated entertainment deductions to 80 percent with the 1986 Tax Reform Act. Later, in 1993, they reduced that 80 percent to 50 percent. And now, with the newest tax reform, lawmakers simply killed business deductions for directly related and associated entertainment.

Tax Reform Cuts Deductions for Employee Meals to 50 Percent

Lawmakers do not like businesses that feed their employees on the business premises. The new tax reform takes what last year was a 100 percent deduction for a meal served for the convenience of the employer, reduces it to 50 percent this year (2018), and then throws it into the compost pile with a zero deduction in 2026 and later years.

Tax Reform Creates Taxes on Employee Fringe Benefit for Bicycles

You could (and can) deduct your costs for reimbursing employees for their qualified bicycle transportation costs. But tax reform now makes this bicycle transportation benefit a taxable event for your employees. As you will see in this article, even though the reimbursements are now taxable to the employees, you likely should continue the benefits.

 

Tax Reform: Entertainment Deductions That Survived

Traditional business entertainment such as business meals and ballgames with clients and prospects died with tax reform. That’s a sad deal, really. On the good news front, your parties with employees remain deductible, as do your employee entertainment facilities and selected other types of entertainment.

Update: 2018 Health Insurance for S Corporation Owners

In IRS Notice 2015-17, the IRS allowed S corporation owners in 2014 and 2015 to avoid the $100-a-day penalties on S corporation reimbursements of individually purchased health insurance and on providing insurance for the owners only. But 2016, 2017, and 2018 are new years, so what is that status now?

Update on Health Savings Accounts (HSAs)

Health savings accounts (HSAs) have gained substantially in popularity since enactment of the Affordable Care Act. Tax-wise, the HSA has some great features such as tax-deductible contributions, tax-deferred (even tax-free if used correctly) growth, and possible retirement benefits.

A New Way to Beat the 50 Percent Cut on Business Meals

The Boston Bruins deducted 100 percent of their meal expenses for employees who traveled out of town for the away games. The IRS challenged that 100 percent and lost. One big deal with the Bruins’ win is that it is precedent-setting, meaning that the Boston Bruins may have created a road map for you that could lead to more 100 percent business meal–expense deductions (versus the usual 50 percent allowance for business meals).

Flowers, Fruit, Books: Tax-Free Fringe Benefits You Have to Like

It’s about as good as it gets when you see the words “tax-free” in the tax law. Under the de minimis fringe benefit rules, your business deducts the cost of giving you or your employees flowers, fruit, books, and similar property under special circumstances. The recipients—you or your employees—receive the de minimis fringe benefits tax-free.

Create Tax-Free Fringe Benefit Deductions for Your Smartphone

Do you operate your business as a corporation, a partnership, or a proprietorship, or as an LLC taxed as one of these three entities? Your choice of entity impacts whether you can create a no-hassle, tax-free fringe benefit for your and/or your employees’ smartphones. In this article, you learn the rules that apply and which ones give you the best benefits.

Achievement Awards Are a Great, Tax-Free Way to Reward Employees

If you have employees who have worked for your business for years and years, you might be thinking of buying them something as a way of showing your appreciation. If you follow a few rules, you can make those presents “employee achievement awards”—and thus tax-deductible for the business and tax-free for the employees. (Depending on how you operate your business, you might even qualify as an employee eligible for the tax-free award.)

Blueprint for Employee-Spouse 105-HRA (Health Reimbursement Arrangement)

The 105-HRA is the medical reimbursement plan you likely want to use if (a) you report your business income and expenses on Schedule C of your Form 1040 and (b) you can make your spouse your one and only eligible employee. Also, if you are single and operate your business as a C corporation, and if you are the one and only eligible employee of your C corporation, the 105-HRA is the medical reimbursement plan for you.

Use a Tax-Advantaged SEP or 401(k) to Retire Early and in Comfort

When you operate your own business, don’t pay yourself last. Pay yourself first. That’s a wealth-building strategy. And if you can combine the pay-yourself-first strategy with a retirement plan, you supercharge your wealth strategy.

Announcing NEW Tax-Deductible Penalty-Free Health Plans for Small Businesses

Finally, the health insurance rules that apply to small businesses that want to provide medical benefits to their employees make more sense and allow some benefits. As you would expect, the new rules are not perfect. After all, this is tax law. But the new rules are light-years ahead of the old rules.

Lawbreakers Rejoice! New Law Wipes Away $100-a-Day Penalty

Do you have fewer than 50 employees? Are you in compliance with the Affordable Care Act? Whether you are in compliance or not, we may have some big news for you. First, if you failed compliance, a new law has likely just released you from the monstrous $100-a-day penalty ($36,500 per employee per year). Second, if you made changes to get into compliance, you may have overtaxed your employees. Now, with this new law, you may be able to undo some or all of that overtaxation.

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.

Tax Tips for Credit Card, Hotel, and Frequent Flyer Rewards

The IRS deemed that personal use of business-earned frequent flyer miles and hotel reward points are tax-free until further notice. Cash rewards are another matter. First, they are not gross income. Second, they reduce basis. Third, they produce a deduction when you donate them to charity.

Tax Tips for Tax-Free Disability Income and Deductible Premiums

Tax law grants tax-free income status to the proceeds you receive 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 there’s also special treatment for S corporation payments on behalf of “more than 2 percent” shareholders.

Q&A: Affordable Care Act

 

Make Magic with a Section 105 Plan

Health insurance premiums are rising at an astronomic rate. This is one of the biggest monthly expenses for many families. That’s where, because you are in business, a properly planned and executed Section 105 plan can work for you. This plan works like magic—it turns your medical expenses into tax-favored business expenses.

2016 Health Insurance for S Corporation Owners

In IRS Notice 2015-17, the IRS allowed S corporation owners in 2014 and 2015 to avoid the $100-a-day penalties on S corporation reimbursements of individually purchased health insurance and on providing insurance for the owners only. But 2016 is a new year, so what is that status now?

Fringe Benefits for an Employee-Spouse in an S Corporation

Triple Tax Advantages: Reimburse Your Employee-Spouse for Health Insurance

Schedule C business owners and their spouses must obtain health insurance coverage for themselves (and any other dependents) or risk a penalty under health care reform. While there are many ways to get that coverage, one way—a properly established proprietorship reimbursement arrangement—can lead to three and possibly four significant tax advantages for the business owner and spouse.

Q&A: Help? Affordable Care Act Health Benefits for One Employee

 

Danger with Business Credit Card

You can make your tax life easier with a business credit card—but only if you use that business credit card correctly for tax purposes. For example, charging an expense to a credit card does not make it tax deductible. You need more proof. And you could create a type of double jeopardy if you operate your business as a corporation.

How Many $15,000 Penalties Do You Face for Not Filing Form 5500-EZ?

Do you have a solo 401(k) plan with more than $250,000 in it? Did you, your tax preparer, or the plan administrator file your 5500-EZ? Are you sure? The penalty for not filing the required 5500-EZ for a plan year is $25 a day, capped at $15,000. That’s for one plan year. If you failed for 10 years, that’s $150,000.

Q&A: Health Insurance Deduction for Solo Owner-Employee of a C Corporation

 

Pay the Nanny Tax and Make Money Doing It

If you plan on paying a nanny at least $1,900 during 2015, then you need to pay the nanny tax (payroll taxes from you, the employer). This strikes fear into many taxpayers who think this is a HUGE HASSLE and a HUGE EXPENSE. But there’s no need to fear this tax. In this article, you learn how you can offset most, if not all, of the tax expense with the help of a couple of tax breaks. In fact, you may actually end up with more money in your pocket in the end.

Reward Yourself and Your Employees with Tax-Free Supper Money

Have you ever faced this “problem”? A sudden boom in business requires you and your employees to work late in order to get everything finished. When this happens, how can you thank your employees for their overtime with a tax-free benefit that’s fully deductible to your business? You can provide a supper money fringe benefit if you follow four rules.

One Additional Way to Create 100 Percent Deductions for Employee Meals

Most business meals suffer a 50 percent cut in the amount you can deduct. But here’s one of those business meal strategies that produces a 100 percent deduction. So if you spend $5,000 for meals with this strategy, you don’t deduct $2,500 because of the 50 percent. Instead, you deduct the full $5,000.

You Can Claim Thousands in Business Education Deductions—Unless You Make This One Mistake

The government wants to give you the gift of education. Your lawmakers in Washington created a tax break for courses that improve or maintain your business skills. You can deduct in full the cost of education ranging from a standalone seminar all the way up to an advanced degree—including the cost of an MBA program. But in order to get this deduction, you have to follow a couple simple rules.

Don’t Put Your S Corporation Vehicle Title in the Wrong Name! It Could Cost You Thousands in Tax Deductions

Three Easy Steps to Deducting All Your Health Insurance Premiums as an S Corporation Owner

If you are an S corporation owner, you can get a full deduction for your health insurance premiums—despite Obamacare and even if your S corporation provides zero health benefits to non-owner employees. You have to follow a few steps to qualify for this deduction, but that’s a piece of cake once you know the rules.

Make Employees Happy with Dental and Vision Benefits Using a Loophole in Obamacare

Have you been longing for the good old days when you could offer a Section 105 health plan to your employees without having to comply with the new Obamacare rules? Well, you can still offer such a plan—provided that you limit the benefits to vision and dental.

Four Steps to Turn a Husband-and-Wife-Only Board Meeting into a Money-Saving, Tax-Deductible Resort Stay

Where can you hold your tax-deductible board meetings if you operate your business as a corporation? Could you go to a nice resort? What if you and your spouse are the only board members? This article answers these common questions. It’s sure to make you smile.

The Easiest and Funnest Deduction You’ll Claim This Year: 4 Rules for Writing Off Employee Outings—100%!

The government wants you to have happy employees. That’s why the tax code grants you extra deductions when you provide entertainment and entertainment facilities that primarily benefit rank-and-file employees. In this article, we examine how the rules work when you take your employees on a party trip.

Don’t Settle for a 50 Percent Write-Off on Employee Lunches: Here’s How to Snag 100 Percent

Through a simple two-step process, you can fully deduct the cost of meals you provide to your employees. That’s right—this strategy helps you avoid the dreaded 50 percent reduction for entertainment expenses. But be careful when you use this strategy—your business may need to classify your meal differently from the meals for non-owner employees.

How to Beat the Absurd New IRS Rule on Taxable Reimbursements of Employee Health Insurance

The IRS just launched its latest attack on your reimbursements for individually purchased health insurance: Even fully taxable reimbursements could still violate the Obamacare rules and expose you to the $100-per-day penalties. But don’t worry. We’ll give you several strategies to beat this new rule.

Big News: IRS Undoes the $100-a-Day Obamacare Penalty and Overtaxation of Your Employees

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.

Last-Minute News from the IRS—S Corporation Owners Are Safe from Obamacare Penalties through 2015

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.

Write Off Your Clothing and Laundry Expenses without Giving All Employees the Same Privilege

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.

Deduct the Shirt off Your Back—Yes, Here’s How You Can Legally Write Off Your Clothing and Laundry Expenses!

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.

Three Rules for Contributing to Your Employees’ Health Savings Accounts and Beating the Dreaded 35 Percent Discrimination Tax

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.

Year-End Retirement and Medical Tax-Deduction Strategies: 7 Ways to Pocket More Money

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.

How to Help Your Employees Pay for Medical Insurance and Reduce Everybody’s Taxes!

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.

Is a W-2 Wage Needed to Create an Employee-Spouse 105 Plan?

If you operate your business as a proprietorship and hire your spouse as an employee, you likely have questions about the need to pay wages to make your spouse a bona fide employee. And you likely want your spouse as a bona fide employee who receives as a tax-free fringe benefit a Section 105 medical reimbursement plan—family coverage, of course.

How to Escape Payroll Taxes on S Corporation Health Insurance

Would you like to avoid payroll taxes on your S corporation’s inclusion of the cost of your health insurance on your W-2? You can. First, you and your S corporation can take advantage of one of two safe harbors. If you don’t qualify for a safe harbor, you can go back to a law originally enacted in 1939 and claim that you are in a separate class of employee exempt from payroll taxes on the health insurance fringe benefit that your S corporation gave you. And then if all else fails, you can pull out the IRS’s own publication and its online assistance and insist that the IRS follow them, even though they’re legally incorrect.

Defined Contribution Health Plans versus the Tax Code

You may have seen advertisements online for “defined contribution health plans.” If you use one of these plans, be sure you understand how they work. Some of them appear to offer reimbursement methods that violate tax law and expose you to enormous penalties. Read this article to identify both the safe and unsafe types of defined contribution health plans and learn how to comply with the law.

Small Employer Health Care under Obamacare

This article gives you a bird’s-eye view of the new health care landscape so that you can see all your post-Obamacare health care options together in one place. Choose the health plan that works best for your business based on the number of employees you have and the amount of money you are willing to spend.

Secrets of 105 Plan Multiple Employee Coverage under Obamacare

As you know, Obamacare has a dramatic impact on Section 105 medical plans that cover more than one employee. Of course, the first question is who is an employee for purposes of the Section 105 medical plan. And if you have multiple employees, you will be happy to know that this article gives you eight strategies for making the 105 plan work for you.

S Corporation Owner’s Path to Health Care under Obamacare

If you are an S corporation owner and you buy health insurance for yourself or your family, you need to follow the IRS rules described in this article in order to protect your tax deductions for the health insurance premiums. You also learn how to escape the Obamacare penalties for group health care even if you discriminate against your employees.

The Best Way to Pay for Group Health Insurance

If you want to cover your employees with group health insurance but worry that the price tag will skyrocket your budget, you need to read this article. You will learn how to limit your annual cost and provide tax breaks to employees for their share of premiums. By following some or all of the strategies, you can drop your after-tax cost of group health insurance coverage.

Tax Deductions for Entertainment Facility (Part 3), Employee Use

Learn how employee use of your ski cabin or beach home produces a 100 percent business asset with deductions for depreciation, operating expenses, and mortgage interest. This can make for a great fringe benefit for both the employees and you. It also can make for a profitable investment.

2014 Attack by Obamacare on Section 105 Medical Plans (HRA Plans)

For tax years’ beginning after December 31, 2013, Obamacare contains good and bad news for Section 105 medical reimbursement plans—health reimbursement accounts (HRAs). Bad news: the new health law requires that you pay for group health insurance if you want a Section 105 plan for more than one employee. Good news: with one employee only, such as your employee-spouse or yourself if you operate as a C corporation, you don’t have to buy group health and you can reimburse expenses as you always have.

HSA Solution to Obamacare

Do you employ 50 or fewer employees? Are you looking to do something on the health care front, but not interested in the group health insurance option? Health savings accounts (HSAs) could be exactly what you are looking for, especially as Obamacare becomes law.

Tax Deductions for Entertainment Facilities (Part 2), W-2 and 1099

You have many ways to make your entertainment facility tax deductible. For example, you can treat use of the facility as compensation to the users. Tax law tags two types of people in your business for purposes of entertainment facility W-2 and 1099 compensation: “specified individuals” and others. For specified individuals whose use of the business beach home, ski lodge, or other entertainment facility creates taxable compensation, tax law limits the business’s deduction for its entertainment facilities. For compensated taxable use by nonspecified individuals, the business faces no special limits on deductions for entertainment facilities.

How to W-2 the Vehicle You Provide to an Employee

You provide your employees with an automobile for business use. You know that their personal use of the vehicle must be included in their wages, but how do you calculate that amount? What valuation rules are available? This article tells you what your choices are and how to apply them.

Tax Deductions for Entertainment Facilities (Part 1)

How would you like a business tax deduction for your yacht, hunting lodge, hunting lease, airplane, beach cottage, fishing camp, swimming pool, ski lodge, or tennis court? Tax law contains a clear set of rules that you can follow to create such deductions. And as you would expect, the rules are pretty demanding.

Tax Deduction for Parking at the Office

Do you own your business? Do you pay parking for yourself? An employee? If so, you need to know how the tax-free fringe-benefit rules for parking work, as explained in this article.

Clarifying Flow Chart for S Corporation Health Insurance

The flow chart in this article helps you visualize what needs to happen at the S corporation for the owner-employee to get any tax benefit from health insurance. The tax rules are not what you would call logical, but the flow chart clarifies the rules and gives you the path to follow to ensure your tax deductions.

Increase Tax Deductions for Business Meals at Employee Meetings

As you likely know, tax law contains a number of rather ugly rules. One such rule is the disallowance of 50 percent of certain meal and entertainment costs. For example, party with your employees and get a 100 percent deduction, but have a serious meeting with your employees in a restaurant and you are stuck with the 50 percent deduction. Interestingly, there is a totally different rule that gives you better tax deductions when you serve the business meal to your employees at a meeting that takes place on your business premises.

Retirement Plan Design When You Have Employees

Employees complicate your retirement plan design, but you have many design options. This article takes you through six plan designs that open your eyes to the many possibilities you have to ensure that you get from your retirement plan the maximum retirement benefits you want.

6 Year-End Medical and Retirement Tax Tips

In this article, you’ll learn four tax-planning strategies for your medical deductions and two strategies for your retirement. If you want to implement the strategies for 2012, you need to get busy now. There’s not much time left, and one of these strategies requires action before December 1.

Shellitos Win Their Section 105 Medical Reimbursement Plan Deductions

Good news. As you may remember from our previous article, the 10th Circuit Court of Appeals sent the Shellito case that involved a Section 105 medical reimbursement plan back to the tax court. We report in this article good news: The tax court reversed its original decision and granted the Shellitos their deductions. Most importantly, this reversal adds clarity to making your Section 105 medical reimbursement plan work.

New Rules Reveal Six Ways to Lower Taxes on Your Personal Use of Your Corporation’s Airplane

Do you own an airplane? If not you, how about your corporation? This month, we are writing about the new IRS regulations that govern your use of your C or S corporation’s aircraft. In this article, you will find more than a half dozen strategies that you can use to minimize the tax bite caused by personal use of your corporation’s aircraft.

Legal Structure to Save Taxes for the Husband-and-Wife Business (Part 2 of 2)

If you and your spouse work together in your business, you need to know the rules of the road for owning and operating your proprietorship, limited liability company, or corporation. In part 1 of this article we discussed how you can save both self-employment and income taxes with the right mix of income and employee status of your spouse. In this part 2, you learn what you need to do to ensure that your operating business entity allows you to achieve the benefits of part 1.

How the Business Owner Can Discriminate with the Health Savings Account

If you operate your business as a proprietorship, S corporation, or single-member LLC, the HSA gives you, the owner, the ability to discriminate in benefits on your behalf. In addition, you get the HSA’s front-end tax deduction, tax-deferred growth, and no taxes on withdrawals used for medical expenses.

Better Deductions for Long-Term Care Insurance Costs

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.

Create a Business Tax Deduction for Your Timeshare When You Allow Use by Employees

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.

Is the S Corporation the Best Tax-Deduction Entity for Your Business?

To know if the S corporation is the best choice of entity for your business, first you need to consider three advantages and nine disadvantages. Next, you need to take the S corporation advantages and disadvantages that apply to you and get a bottom-line number comparison with your second choice for an operating entity. In this way, you can make a logical choice, knowing that your best choice will stay with you for a number of years and let you pocket more after-tax cash while you sleep better at night.

Corporations Beat Proprietorships in Tax Deductions for Cell Phones

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.

Professional Corporation as a C Corporation Is a Personal Service Corporation

If you incorporate your personal service business, you face the personal service corporation tax rates, where tax brackets do not exist and the 35 percent flat-tax rate applies.

Should Your S Corporation Discriminate on Your Behalf with Its Health Insurance Coverage?

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.

How to Find Your Best Tax-Deduction Business Entity

Is your business entity the best tax-deduction business entity for you? Do you need liability protection? How do the different entities produce different tax deductions? If you are looking for answers to these questions, this article is for you. Also, the article contains one sure way to select the best business entity for you.

Employer Uses De Minimis Fringe Benefit Rules to Deduct Tax-Free Gift of Flowers to Employee

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.

Tax Refund When Paying the “Nanny Tax”

Learn how you can qualify for a tax refund when you pay the “nanny tax” on the wages that you pay your nanny. For the most part, you want to qualify for the child and dependent care credit because the dependent care assistance program discriminates against the one-owner or husband-and-wife-owned business.

Tax Rules That Allow Tax Deductions for Your Yacht

To get a tax deduction for your yacht, use it for business travel and avoid the entertainment facility rules. If you run afoul of the entertainment facility rules, you have one small hope. To maximize your deductions, you want more than 50 percent business use and knowledge of the luxury water transportation tax deduction limits.

Best Small-Business Retirement Plans: Part 5, the Defined Benefit Pension Plan Option

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.

Best Small-Business Retirement Plans: Part 4, the Solo 401(k) Option

This is part 4 in our series of articles on retirement plans for the one-owner or husband-and-wife-owned business. Here we explain the solo 401(k), which permits the largest deductions of the defined contribution plans. The solo 401(k) has unique advantages when your income fits this profile.

Best Small-Business Retirement Plans: Part 3, the SIMPLE-IRA Option

The SIMPLE-IRA may be the best retirement plan for the modest-income business owner. And, as you would expect from its name, the SIMPLE-IRA is easy to understand and implement. However, there is one very unusual exception. The SIMPLE-IRA has a current-year October 1 deadline for having the plan in place. That’s 12.5 months earlier than the deadline for a SEP.

Tax Tips for Divorce (Part 2)

Part 2 of the divorce series of articles covers your retirement plans and IRAs. Your goal when giving a little or a lot of your retirement plan to your ex is likely to be that he or she who gets the cash should pay the taxes. To make the taxes follow the money, you need specific words in the right divorce documents. If you fail to put the words in the right place, you can give the cash to your ex and double whammy yourself by paying taxes and penalties to the IRS.

The Best Small-Business Retirement Plans: Part 1

This is the first in a series of articles on retirement plans for small-business owners. In this first article, you learn the basics. Why should you have a retirement plan? When should you start contributing to your plan? What types of plans are available to you? Regardless of the type of business entity—proprietorship, LLC, S corporation, or C corporation—this article gives you the basics you need for a quality retirement plan.

Nine Important Facts about the New Age 27 Health Insurance Rules

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

Tax Tips for the S Corporation’s Fringe Benefit Realization

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.

Seeing the HSA in Action for One Year

The health savings account (HSA) offers the opportunity to save on insurance costs and create an investment nest egg. To learn how the HSA could work for you, do some easy arithmetic, like we show you in this article.

Tax-Free Supper Money Tax Tips

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?

Tax-Free Lunches for 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?

New Law: Another Small-Business Economic Stimulus Package for You

The Small Business Jobs Act of 2010 spends $12 billion on small businesses, hoping to add a little stimulus to this economy. Make sure you are getting your fair share of this stimulation.

New Law Grandfathers Discriminatory Health Insurance

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.

Pocket More Cash by Paying Transportation Fringe Benefits

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.

Tax Deduction on Sale of Business Car

Learn how to calculate the tax deduction when you sell your business car at a loss—the most likely result.

Federal Tax Deductions for Section 127 Education of Grandchild

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.

Husband and Wife S Corporation Board Meeting

The Heineman case gives a roadmap to how a husband and wife might deduct the cost of attending a board of directors meeting where they are the only participants. Using the principles enunciated in Heineman, husband-and-wife corporate owners will find deducting the out-of-town board meeting easier than deducting board meetings that occur in town.

Boondoggle Trip with Employees

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.

New Law and New Times Require a Close Look at Your Retirement Funds

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.

Husband and Wife Business

When the husband and wife work together in the business, but report that business on one Schedule C, they create a tax problem for themselves. Is this a partnership or joint venture where both husband and wife have earned income subject to self-employment taxes? You can avoid this problem by hiring the spouse not reporting on a Schedule C. You then can avoid payroll taxes on the wages to the employee-spouse by making the compensation non-W-2 income.

IRS Puts Screws to S Corporation Health Insurance

The more than 2 percent owner of an S corporation may not benefit from a fringe benefit like corporate paid health insurance. Further, this owner-employee is not “self employed” for purposes of deducting self-employed health insurance on page 1 of IRS Form 1040. This leaves the more than 2 percent owner with only one IRS approved method for gaining the maximum deduction from health insurance.