By topic: Legislation

Raise Hell: Save Your Employee Retention Credit

IRS Notice 2021-49 disallowing the employee retention credit to more than 50 percent owners who have certain living relatives has to be a mistake. It’s too illogical to stand. In fact, you have to question whether the notice is technically correct.

Vaccinated? Claim Tax Credits for Your Employees and Yourself

If you encourage your employees to get the COVID-19 vaccination by giving them paid time off through September 30, 2021, you can collect refundable sick and family leave tax credits of up to $17,511 per employee. The credit is also available if an employee takes time off to help family or household members get vaccinated or recover from side effects of the vaccination. Similar credits are available if you are self-employed and have no employees.

Don’t Miss Out on the Employee Retention Credit

You likely qualify for the employee retention credit. It has the potential to really help you. The credit is up to $5,000 per employee during 2020 and up to $28,000 per employee in 2021. That’s $33,000 per employee. With 10 employees, that could total $330,000.

2021 Tax Loss Nightmare: Return of the TCJA NOL Rules

The Tax Cuts and Jobs Act (TCJA) limited your ability to get immediate value from your net operating loss (NOL). While Congress gave you a break in the CARES Act—the

ugly TCJA NOL rules are back in tax year 2021. We’ll tell you the limits and how you can maneuver other tax positions to gain immediate value for your NOL.

You Took Coronavirus-Related IRA Money Last Year: What Now?

If you took the coronavirus-related IRA distribution of up to $100,000 during 2020, here are your options for avoiding taxes on that money.

Congress Closes the PayPal 1099-K Reporting Loophole

The PayPal loophole is going away seven months from now. You may remember the strategy where you can avoid giving 1099s to contractors and vendors when you use PayPal or a similar service as your payment platform. In the past, PayPal often did not have to provide those contractors and vendors with a 1099. According to lawmakers, this created a situation where those people who use PayPal have an easy ability to cheat (i.e., not report the income on their tax returns).

IRS Focuses on Cryptocurrency: Are You Ready?

If you are looking for a wild ride, examine cryptocurrency. Not only can it rise to $55,000 and then drop to $30,000 in a matter of weeks, but it can also trigger significant tax consequences. And now, the IRS wants to know about you and your cryptocurrency activities.

Self-Employed During the Pandemic? Washington Did Not Forget You

The self-employed normally get the short end of the stick when it comes to government aid in times of economic disruption. But the COVID-19 pandemic is different. Congress has provided the self-employed with aid never seen before, including forgivable PPP loans, tax credits for sick leave and family leave, increased Affordable Care Act subsidies, and even unemployment benefits. But the benefits are temporary, so take advantage of them now.

Helicopter View of Meals and Entertainment (2021-2022)

COVID-19 is going away, perhaps by early summer. It’s time to start thinking business meals and partying with your employees. The chart in this article gives you a helicopter view of the latest business meal and entertainment rules.

IRS Defines Real Property for Section 1031 Like-Kind Exchanges

Section 1031 exchanges are a great way to acquire new property without paying tax on the gains from selling old property. But the rules have changed. The Tax Cuts and Jobs Act limits so-called exchanges (they are actually sales and purchases) to real property. Personal property is now boot. New IRS regulations define real property broadly for Section 1031 purposes and allow a certain amount of personal property to be included in an exchange. They also make it clear that the real property owners can use cost segregation and still benefit from Section 1031 exchanges.

How Renovating a Historic Building Can Put Money in Your Pocket

The federal Rehabilitation Tax Credit provides a 20 percent tax credit for owners or leaseholders to renovate certified historic buildings. Most states offer similar tax credits, with different percentages, providing additional cost savings. But this is tax law, and as you would expect, there are some tricky rules that you need to follow to qualify for these huge subsidies.

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.

PPP Extended—Act Fast or Miss Out

This is likely it—your last chance to obtain first- and second-draw Paycheck Protection Program (PPP) monies. A new law, the PPP Extension Act of 2021, extends the expiration date to the later of May 31 or when the money runs out. Note the phrase “when the money runs out,” and be forewarned that this can happen within weeks. So, don’t procrastinate—not even for one day.

Can You Claim the ERC for the Owner of a C or S Corporation?

Can your corporation claim the employee retention credit on the W-2 wages it pays to a shareholder-employee who owns more than 50 percent of the corporation? There’s disagreement about this within the tax community. What should you do? Read this article.

Double Benefits: Claiming Both the ERC and Tax-Free PPP

When Congress passed the CARES Act, it gave small-business owners like you two choices: get tax-free Paycheck Protection Program (PPP) monies or take the employee retention credit (ERC). Fast-forward to the new law enacted on December, 27, 2020, and you will find that you can now benefit from both programs, retroactive to March 13, 2020, as you see in this article.

Starting a New Business? Get Up to $100,000 in Tax-Free Money

Congress created the employee retention credit (ERC) to help your business that continued to pay employees even though it was impacted by COVID-19. Fast-forward to the new American Rescue Plan Act of 2021, and now you can potentially take an ERC of up to $100,000 during the last six months of 2021 if you start a new business during the pandemic. In this article, we’ll explain how this valuable provision works and the net amount it can put in your pocket.

Employee Retention Credit: Step-by-Step Example

Congress created the COVID-19 employee retention credit to help employers continue to pay employees while affected by the COVID-19 pandemic. The Consolidated Appropriations Act, 2021, and the American Rescue Plan Act expanded access to this tax credit in both tax years 2020 and 2021. In this article, you see how a small-business owner calculates and claims this most beneficial tax credit.

ARPA Ends Dreaded Cliff for Health Insurance Premium Tax Credit

With the passage of the American Rescue Plan Act of 2021, Congress has temporarily abolished the health insurance premium tax credit “subsidy cliff.” For 2021 and 2022, self-employed and small-business owners and other individuals who must purchase individual health insurance may qualify for premium tax credit health insurance subsidies even if their income far exceeds the old limit of 400 percent of the federal poverty level.

Wow! Married, Filing Separately, May Be the Tax Year 2020 Strategy

In most circumstances, you save federal tax when you’re married by filing a joint return versus two separate returns. But for tax year 2020, due to how Congress wrote some of the temporary COVID-19 tax benefit provisions, you may end up pocketing more money by filing separate returns. We’ll show you why this is the case and how to determine which filing status you should use.

ARPA Adds Cash to the Child Tax Credit (2021 Only)

In the newly enacted American Rescue Plan Act of 2021, lawmakers enhanced the child tax credit with additional monies, some of which are refundable beginning in July 2021. The newly enhanced tax credits are available for the 2021 tax year only.

ARPA Adds Dollars to the Child and Dependent Care Tax Credit

The new American Rescue Plan Act makes major—but temporary, for tax year 2021 only—changes to the federal income tax child and dependent care credit. This is the tax credit you can earn if you spend money taking care of your children and other qualifying dependents.

Tax Bonanza: Expanded Individual Tax Credits in New Law

The American Rescue Plan Act of 2021 provided billions of dollars in new expanded tax credits for individuals like you for tax years 2021 and/or 2022. The three main tax credits Congress increased are the child tax credit, the dependent care credit, and the premium tax credit for health insurance. Learn how you can get thousands more in your pocket for tax year 2021 due to these changes.

ARPA Liberalizes the Earned Income Tax Credit Rules

The newly enacted American Rescue Plan Act of 2021 liberalizes the earned income tax credit, making it more valuable for some of those who claim it. In this article, we walk you through the credit as it currently exists and explain how it’s more available and enhanced for 2021.

Breaking News: New PPP for the Self-Employed and Small Businesses

If you have fewer than 20 employees (including none because you are self-employed), the SBA is in the process of trying to help you. Two things are going on. First, you have an exclusive window to obtain your Paycheck Protection Program (PPP) money without competition from the big guys. Second, if you are self-employed, the SBA is creating a mechanism for more PPP money for you.

Deducting Disaster Losses for Individuals

If personal non-business property such as your home, personal belongings, or personal car is damaged or destroyed in a disaster, you may qualify for a tax deduction for casualty losses. But during 2018-2025, you may deduct only personal casualty losses caused by federal disasters. And your deduction is whittled down by insurance recoveries and particular casualty loss limitations.

Update: COVID-19 Tax Relief Measures after the New Law

The CARES Act made many temporary changes in the tax law. The new Consolidated Appropriations Act adjusted some of these and left others to die on December 31, 2020. With all the changes that took place in 2020, you need to know what’s left, enhanced, and over with, as we explain in this article.

Business Tax Breaks Thanks to the Recently Enacted CAA

When you operate a business, you have a variety of tax breaks available. The recently enacted Consolidated Appropriations Act extends and expands some of the breaks. We bring them to your attention as a tax-strategy buffet. You will find tax breaks you can use right away and others that can be used perhaps retroactively.

Congress Passes Corporate Transparency Act: What It Means for You

Today, you can form an LLC or a corporation in most states without revealing your identity to any government agency. But this pro-secrecy era is coming to an end because Congress passed the Corporate Transparency Act. Starting in 2022, the names and addresses of many LLCs’ and corporations’ beneficial owners will have to be provided to the U.S. Department of the Treasury. The information won’t be made public, but law enforcement will use it. The law impacts both new and existing LLCs and corporations which will have a new federal filing requirement.

Who Qualifies for First Draw PPP Money Today?

Two things to know about the Paycheck Protection Program (PPP) first draw: (1) The first draw is for those who missed getting in on the original PPP, which expired on August 8, 2020. (2) Don’t think of a PPP draw as a loan. It’s not a loan. It’s a cash infusion. You have to repay a loan. You don’t have to repay the PPP funds.

COVID-19 Relief Law Turbocharged Employee Retention Credit

As part of the March 2020 CARES Act, Congress created a COVID-19 employee retention credit to provide financial support to businesses to maintain payroll. But this credit was not available if you took a PPP loan. Now, thanks to the new COVID-19 relief law enacted December 27, 2020, a business with a PPP loan can retroactively claim employee retention tax credits.

If the SBA Makes Loan Payments on Your Behalf, Are You Taxed?

The CARES Act, as modified by the new December 27 law, requires the SBA to make anywhere from six to 14 months’ worth of payments for non-disaster loans, including 7(a) loans, 504 loans, and microloans. If the SBA made or is making these payments on your loans, do you have to pay tax on these payments?

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.

Lawmakers Extend the Tax Extenders with the COVID-19 Relief Law

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 deals with the annual tax extenders. Congress made some of them permanent, while others got short- or long-term extensions. We’ll go through each and tell you how it fared in the legislation.

PPP Alert: New Shot for Your Tax-Free Cash

The new COVID-19 stimulus adds new money to the Paycheck Protection Program (PPP) for those who missed out on the first round. If you missed out, don’t do that again. The PPP money is a tax-free gift with no downside and all upside.

New PPP Forgiveness Rules for Past, Current, and New PPP Money

A new law makes the already terrific Paycheck Protection Program (PPP) better for everyone. It clarifies that the PPP money is tax-free and that expenses paid with the money are deductible. This applies retroactively to the inception of the CARES Act on March 27, 2020, so it benefits past PPP loans, current PPP loans that are outstanding, and new loans.

Round 2: Additional Tax-Free PPP Money for You?

If you have or had a Paycheck Protection Program (PPP) loan, you might qualify for a new, second round of PPP monies. To get a second-draw PPP infusion of money, you have to have 300 or fewer employees; suffered a 25 percent or greater loss in revenue during at least one quarter of 2020 when compared to 2019; and already used or plan to use your original PPP monies.

New Laws—COVID-19-Related Government Grants: Taxable or Not?

Billions of dollars in grants have been doled out to individuals and businesses in the wake of the COVID-19 pandemic. COVID-19-related grants to individuals are ordinarily not taxable, but grants to business are taxed unless Congress makes an exception. Congress has made some exceptions for businesses, as you will see in this article.

ABLE Accounts: A Great Deal for the Disabled and Their Families

ABLE accounts allow disabled individuals and their family members to save a substantial amount of money without losing government benefits. The money grows tax-free and can be withdrawn tax-free to use for a wide variety of expenses. But only people who became disabled or blind before age 26 qualify for these tax-advantaged accounts.

New Stimulus Law Grants Eight Tax Breaks for 1040 Filers

The massive new stimulus law contains eight new tax breaks that help the average non-business taxpayer. These include something for everyone, both rich and poor. Wealthy taxpayers can contribute more to charity and still get a deduction; average people get an extension of the universal charitable deduction; and low-income taxpayers can get a larger earned income tax credit. Popular programs such as the lifetime learning credit are expanded to help more people. The bill also extends some favorable tax rules, such as the 7.5 percent adjusted gross income floor for the medical deduction.

New IRS Efforts to Destroy Tax Deductions for PPP Paid Expenses

Lawmakers and the IRS disagree on whether you are permitted to deduct the expenses you pay with your Paycheck Protection Program (PPP) loans. The problem started with poor drafting of the original forgiveness wording by the lawmakers. The IRS says it has to follow that bad drafting and disallow deductions for expenses paid with PPP loans. There’s much to this story, as you will learn in this article.

Good News If Your PPP Loan Is for $50,000 or Less

As you likely know by now, the Paycheck Protection Program (PPP) loan and its forgiveness process have been an ever-changing (and often confusing) ride so far. With the new rules for PPP loans of $50,000 or less, you escape from the most difficult part of the loan forgiveness if you had to consider employees. And you may even obtain more loan forgiveness than you would have otherwise.

If the SBA Made Six Loan Payments on Your Behalf, Are You Taxed?

The CARES Act requires the SBA to make six months’ worth of payments for non-disaster SBA loans, including 7(a) loans, 504 loans, and microloans. If you have such a loan, do you have to pay tax on these payments? The IRS has said yes in the past, but it could change its mind this time.

2020 Last-Minute Year-End Retirement Deductions

Does your business have a retirement plan for you and your employees, if any? It should. You have more new reasons in 2020 to get your retirement plan in place and perhaps make changes in existing plans.

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).

Government to Landlords: Drop Dead!

An unprecedented nationwide moratorium on evictions for non-payment of rent is in place through the end of 2020 (and for even longer in some states). But landlords may still be able to evict some problem tenants, and even sue for overdue rent. Other options include entering into payment plans with struggling tenants, seeking forbearance from lenders, and obtaining low-interest SBA loans. That’s the practical problem—and then you have the tax issues. Rental losses may or may not be deductible against non-rental income, subject to complex passive loss rules, as we explain here.

No PPP Loans Today, but You Can Still Get $150,000 from the SBA

Forgivable Payroll Protection Program (PPP) loans are over for now, but if your business is still suffering due to the COVID-19 pandemic, you can get up to $150,000 with an SBA Economic Injury Disaster Loan (EIDL). Unlike the PPP loan, the EIDL has no forgiveness possibility. You have to pay off the loan. The interest rate and terms are better than commercial loans, but there are many strings attached to these low-interest EIDLs.

Seven Things to Know Before You Take Out an EIDL

Your businesses can borrow up to $150,000 from the Small Business Administration (SBA) with a low-interest Economic Injury Disaster Loan (EIDL). But you and/or your business will be subject to some strict SBA requirements for SBA permission before making changes to your business or distributing its assets. You’ll also have to keep extensive records, and you may have to pledge all your business assts (other than real estate) as collateral.

PPP Cash Infusion: Haven’t Applied? Apply Today—Don’t Wait

Self-employed? Your Payroll Protection Program (PPP) payroll is your 2019 Schedule C net profit. Partnership? Your PPP payroll is the adjusted self-employment income of the partners. S or C corporation owner, your W-2 is your income. Why know this? So you can apply for your PPP cash infusion as we explain in this article.

Raise Hell: Help Lawmakers Make PPP Expenses Tax Deductible

When it comes to the Payroll Protection Program monies, there are some flies in the ointment when it comes to forgiveness. The first fly is that when the loan is forgiven, the business expenses paid with the forgiven money are not deductible. The second fly is that the unforgiven expense rule discriminates against S and C corporations. So it’s time for you to kill flies, as you learn in this article.

Four PPP Forgiveness Answers for S Corporation Owner-Employees

Tax law definitions do not apply to much of the Payroll Protection Program, making it new ground for owners of S corporations. Here are answers to four questions of concern to many S corporation owners.

Four Insights into the PPP Loan and Its Forgiveness

In this article, we offer insights into (1) how good faith at the time of the PPP application works; (2) the differences in the PPP, EIDL advance, and EIDL; (3) the possibility of automatic loan forgiveness without applying for it; and (4) the four categories of owner-employees.

Government Clarifies PPP Loan Forgiveness for the Self-Employed

The expression “I’m from the government, and I’m here to help you” is often counted as one of the three great lies. Toss that thinking out the window when you consider the PPP loan forgiveness rules that apply to the self-employed with no employees. For sure, this process is a government help to Schedule C taxpayers who took the time to obtain their PPP cash infusions.

PPP Loan Forgiveness for Partnerships and S and C Corporations

Thanks to new government guidance, we have clarity on how the self-employed and owner-employees treat their PPP loan forgiveness applications. The new PPP rules explain how you identify qualifying PPP compensation for partnerships, corporations, and the self-employed. The new rules also explain when you can apply for forgiveness. Let’s get started.

Do I Have to Defer My Self-Employment Tax Payment?

The CARES Act provided tax payment relief for employers and self-employed taxpayers. You can defer payment of a portion of your self-employment tax—but do you have to, or can you pay if you have the cash? We’ll give you the answer plus some things to consider when making your decision.

Nine Insights into PPP Loan Forgiveness for the Self-Employed

When you are self-employed with no employees, the PPP program is a COVID-19 gift. If you now have your PPP funds, you need to review this article for insights on how to handle the money. After all, the idea is to have the loan forgiven.

Six Insights into the PPP for Partnerships

The PPP free-cash program to assist businesses during the COVID-19 pandemic is gaining traction and clarity. If you operate your business as a partnership, you have several recent developments that make the free-cash program more to your benefit, as we explain in this article.

COVID-19: Two New Retirement Account Strategies You Need to Know

The CARES Act changed several retirement account–related rules. The changes opened up some time-limited windows for tax year 2020 strategies that can save you tax dollars. In this article, we discuss (a) how you might be able to undo an RMD you already took and (b) how to get a special tax benefit for a Roth IRA conversion.

Q&A: Is the EIDL Advance Taxable?

The IRS issued guidance that business expenses used to create PPP loan forgiveness are non-deductible. If you received an EIDL emergency advance, you might wonder if that advance is taxable to you or reduces your deductible business expenses. The IRS hasn’t given specific guidance, but we’ll give you our opinion on how this money will be treated.

Self-Employed with No Employees? Get Your COVID-19 Cash Now

Don’t overlook the COVID-19 Payroll Protection Program (PPP) if you are self-employed with no employees. For this program, you (as a self-employed taxpayer) count as an employee, and with only yourself, you qualify for the COVID-19 cash.

COVID-19: Tax Benefits for S Corporation Owners

Congress passed many tax benefits for small-business owners due to the COVID-19 pandemic. But if you are an S corporation owner, you likely know that the tax law sometimes treats you, as a more-than-2-percent shareholder, differently from other employees. In this article, we explain how the most common COVID-19 tax provisions impact the S corporation owner specifically.

Q&A: Are PPP Loan Forgiveness Expenses Deductible?

Millions of small-business owners like you are getting PPP loans and looking forward to non-taxable loan forgiveness. But how does this impact your tax deductions for the expense payments you use to qualify for that forgiveness? The IRS just gave us its opinion, as you will find in this article.

Quick Cash: COVID-19 CARES Act Creates Five-Year NOL Carryback

The Tax Cuts and Jobs Act took away your ability to get an immediate cash benefit from your net operating loss (NOL). Now, due to the COVID-19 pandemic, Congress temporarily brought back the favorable tax treatment for 2018, 2019, and 2020 NOLs. We’ll tell you how you can cash in on this change right now.

CARES Act Fixes TCJA Glitch on QIP, Requires Action

Congress made an error in the Tax Cuts and Jobs Act that limited your ability to fully expense your qualified improvement property. The CARES Act fixed the issue retroactively to tax year 2018. If you have such property in your prior filed 2018 or 2019 tax returns, you likely have no choice but to correct those returns. But the bright side is that the corrected law gives you options that enable you to pick the best tax result.

Making Smart Selections from the COVID-19 Tax Relief Buffet

The federal government has given you many ways to find relief from the effect of COVID-19 on your business. You have to like the rescue. But it does require you to make choices as to which assistance to accept, because the selection of one type may preclude benefiting from a second type.

COVID-19: New SBA Loans for Small Businesses—Maybe a Great Deal

COVID-19 has hit American businesses hard, to say the least. You may be eligible for up to $10 million to help pay workers and keep your doors open under a brand-new SBA program. And with this program, you may qualify to obtain some loan relief.

COVID-19: Tax Season Delayed Until July 15—Wait or File Now?

Due to the COVID-19 pandemic, the IRS postponed certain federal tax returns and payments due on April 15, 2020. The scope of the original relief was narrow, but IRS Notice 2020-23 significantly expanded the postponement. So you need to ask yourself: “Do I qualify?” And if you do, do you still want to file and pay now, or wait?

COVID-19: CARES Act Allows $100,000 Tax-Free IRA Grab and Repay

COVID-19 has created many tax breaks for you and your business to mitigate the financial difficulties caused by the coronavirus. In this article, we explain how you may be able to take money from your IRA and other retirement accounts, avoid early withdrawal penalties, and have generous options on repayment (or not). We also explain when you don’t have to take the required minimum distribution from your IRA.

COVID-19: Important Tax Breaks from the CARES Act

Congress just passed the CARES Act in response to the COVID-19 pandemic. In it, there are a lot of important tax benefits for you and your business. We’ll tell you about a collection of important ones you need to know.

Tax Loophole Allows Tax-Free COVID-19 Payments to Employees

A special tax loophole exists for disaster-related payments. Such qualified payments are deductible by the payor and tax-free to the recipient. The COVID-19 pandemic qualifies as a disaster and activates this tax benefit. We’ll tell you how both you and your employees can benefit from this provision today.

COVID-19: IRS Provides Relief from Enforcement Actions

During the COVID-19 pandemic, the last thing you need is the IRS doing bad things, like auditing you or levying your bank account or wages. But don’t worry—the IRS is pausing most of its collection and audit enforcement actions. When you read the article, we’ll tell you what it is stopping and for how long.

COVID-19: Significant Payroll and Self-Employment Tax Relief

If you are in business for yourself—say, as a corporation or self-employed—payroll taxes and self-employment taxes are likely two of your biggest tax burdens. Here’s some possible good news: Congress decided to give you significant relief from these taxes due to the COVID-19 pandemic. We’ll tell you what relief options are available and whether or not you qualify.

New 2020 Section 199A Calculator

In these topsy-turvy times, don’t overlook planning for your free 20 percent tax deduction under Section 199A. Here, you find the rules you need to know to find your QBI, Section 199A wages, and Section 199A property along with an easy-to-use calculator that you can use to figure into your 2020 Section 199A deduction possibilities.

Beware of the Dark Side When Considering the C Corporation

As you likely know, the Tax Cuts and Jobs Act made a big change in how C corporations are taxed—one flat, 21 percent rate. The new, lower rate makes the C corporation far more appealing than in prior years. But you also need to look at the dark side of this possible opportunity.

Beat the Unfair $10,000 SALT Cap with a C Corporation

The Tax Cuts and Jobs Act’s $10,000 cap on your state and local tax deductions probably took cash out of your wallet—especially if you have a profitable S corporation. A C corporation can make your state income taxes on your net business income 100 percent deductible. When should you make the move to a C corporation?

Eight Answers to Questions About the SECURE Act

The SECURE Act changed many tax law provisions related to retirement and savings. We wrote about the new law last month and have since received many questions. In this article, we give you the answers to eight questions.

Top Eight Changes in the SECURE Act You Need to Know

Our lawmakers did it again. They made more last-minute tax law changes, which the president signed into law on December 20, 2019. One such new law is called the SECURE Act. This new law made a lot of changes to how you save for retirement and spend money in retirement. Don’t worry, though. We’ll give you the most important provisions you need to know, and how they impact you regardless of age.

Congress Reinstates Expired Tax Provisions—Some Back to 2018

Every year, we wonder whether Congress will renew various expiring tax breaks, many of which are known as “extenders.” Many extenders died on December 31, 2017, and Congress let them remain dead for all of 2018. Now Congress has brought them back from the dead—and retroactively to January 1, 2018, meaning an amended return may be in your future.

Congress Kills TCJA Kiddie Tax Changes

In December 2017, Congress enacted the TCJA and changed how your children calculate their tax on their investment-type income. The TCJA changes led to much higher tax bills for many children. On December 19, 2019, Congress passed a bill that the president signed into law on December 20, 2019 (Pub. L. 116-94). The new law repeals the kiddie tax changes from the TCJA and takes you back to the old kiddie tax rules, even retroactively if you so desire.

Divorce: Beat Alimony, Redeem Spouse’s Stock in Your Closely Held Corp.

The Tax Cuts and Jobs Act altered the rules of the road in divorce planning. The significant change is that alimony is no longer tax-deductible; therefore, you want to avoid paying alimony. You may be able to sidestep alimony by transferring assets to your ex—and also have your ex carry the tax burden associated with those assets.

TCJA Changes Vacant Land Tax Strategies

The Tax Cuts and Jobs Act (TCJA) likely requires that you rethink the tax strategies you were using on your vacant land investments. And the TCJA changes may be such that you have to rethink vacant land as an investment, at least for the years impacted by the TCJA.

Q&A: QBI Calculation Conundrum?

When your taxable income is in the phaseout range, your Section 199A deduction calculation is more complicated. With an out-of-favor specified service trade or business, you add more complications. Now, let’s add to the equation a business that shows a business loss. In this article, you will see how to do the calculations when you have all three issues.

Will the Newly Released Section 199A Rental Safe Harbor Work for You?

In January, an IRS Notice gave you a Section 199A safe-harbor option for your rental properties, possibly making it easier for you to qualify for this new tax deduction. Now, the IRS has made a number of changes to its original notice and finalized the safe harbor in a Revenue Procedure. We’ll tell you all you need to know about the final version. Then you can decide if you want to use the safe harbor or find other ways to qualify your rentals for the Section 199A deduction.

New Individual Coverage HRA Turns the Clock Back to Pre-ACA Health Care Options

The ACA destroyed a lot of the advantages of the Section 105 medical reimbursement plan. While the QSEHRA was, and remains, a good option for small employers, something even better has arrived—for employers of all sizes—starting in 2020.

Capture Your 199A Tax Deduction

The Tax Cuts and Jobs Act brought sweeping changes to the tax laws―some good and some bad. But the one change that can potentially provide you the biggest tax benefit is the Section 199A deduction.

Q&A: Spousal Business and 199A Deduction

Both you and your spouse have your own businesses. Your spouse’s business provides paid services to your business. Could this arrangement cause you problems when claiming a Section 199A deduction?

2019 Brings You New Partnership Audit Procedures

Congress changed the IRS procedures for auditing partnerships, and they apply beginning with your 2018 partnership tax return. Under the new rules, an audit can lead to a partnership-level tax at a 37 percent rate. We’ll explain the new rules and how your partnership can potentially avoid paying this new audit tax.

New Tool for Your Use: 2019 Section 199A Calculator

When planning your Section 199A tax deduction, avoid difficult calculations and save time by using the new 2019 Section 199A Deduction Calculator. Inside this article, you find the rules you need to know to find your QBI, Section 199A wages, and Section 199A property that can figure into your Section 199A deduction possibilities.

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.

When Renting to a C Corporation Creates QBI

What rules apply for purposes of the new 20 percent deduction under Section 199A when you rent an office or other building to your personally owned C corporation?

Q&A: QBI and Self-Employment Tax Savings for S Corp. as a Partner

It’s common to consider making your S corporation (versus yourself) a partner in your partnership: it saves you self-employment taxes. Does this affect your Section 199A deduction? We’ll explain how it does, what that means, and strategies for you to make things better.

Q&A: Making Rental Property Work with the Section 199A Deduction

You’ll find much to love about the new Section 199A tax deduction when you qualify for it. One area where you can find mass confusion is with rental properties. To avoid much of this rental property muddle, download the special report you find in this article.

IRS FAQs on Section 199A: Nasty? Helpful? Wrong?

On April 11, likely after you filed your tax return, the IRS updated its Section 199A frequently asked questions (FAQs) by increasing the number of questions and answers from 12 to 33. We noted three of the FAQs that will cause problems for many taxpayers. In fact, there will be taxpayers who will need to file amended tax returns because of the FAQs.

How to Handle Multiple Rental Activities and the 199A Deduction

Applying the Section 199A deduction to your rental activity isn’t easy. If you’ve got multiple rental activities, it’s more complex with additional complications. Don’t worry, though—we’ll go step by step through the considerations so that you know you’ve got all your bases covered.

Q&A: Simple Recap of TCJA Articles

In this article, you see three easy ways to find the Tax Cuts and Jobs Act (TCJA) articles that we have written: (1) use the resource guide to find the articles by topic with short summaries of the prior and new laws; (2) use the Browse by Topic function; or (3) use the search engine.

TCJA Allows Bonus Depreciation on Purchase of Leased Vehicle

Good news, bad news! Bad news: as in prior years, buying the vehicle you lease destroys any opportunity to claim Section 179 expensing. Good news: the TCJA added two new provisions that now allow you to claim bonus depreciation on the purchase of a vehicle that you lease.

Roth IRA After TCJA: The Backdoor Is Still Open

The Roth IRA is an excellent way to grow your retirement savings, but the ability to make contributions to a Roth is phased out beyond certain income limits. A backdoor Roth allows you to make an end run around the limits.

Caution: 199A Calculator Is Business-by-Business without Aggregation

Your 199A deduction requires W-2 wages and/or property when your taxable income is greater than $415,000 married, filing jointly, or $207,500, filing as single or head of household. When you are above these amounts and want to calculate your 20 percent deduction, make sure to enter separate businesses separately in the Section 199A calculator if you do not formally elect aggregation of your Section 199A businesses.

Good News: Most Rentals Likely Qualify as Section 199A Businesses

The IRS safe harbor that you find in Notice 2019-7 may well represent a red herring for you because your rental properties likely already qualify as a business for the Section 199A deduction. If so, you can avoid the complexities of the safe harbor.

Q&A: What Can I Do If My K-1 Omits 199A Information?

Tax reform’s Section 199A deduction often confuses small-business owners and tax professionals alike. It’s quite possible you’ll get a Schedule K-1 from a business that omits the information you need to calculate your deduction. What do you do?

TCJA Planning: Terminating Your S Corporation Election

Tax reform may have you thinking of changing your S corporation to a C corporation, partnership, or sole proprietorship. To do this, you’ll have to terminate your S corporation election and possibly make other tax elections. We’ll explain how you do this and the tax consequences of doing so.

Q&A: Improvement Property Update

Congress wanted qualified improvement property to have tax-favored status under tax reform. But Congress made an error in writing the Tax Cuts and Jobs Act and made improvement property treatment worse than before. Did Congress fix its goof?

IRS Saves Many Vehicles from the TCJA Bonus Depreciation Debacle

Tax law limits depreciation deductions on what it considers luxury vehicles. The Tax Cuts and Jobs Act created 100 percent bonus depreciation, and that means you can totally deduct the cost of qualifying assets. One major exception is the $8,000 bonus depreciation cap that applies to a tax law-defined luxury automobile, crossover vehicle, pickup truck, or sport utility vehicle (SUV).

TCJA One Way to Deduct Personal Vehicle Used for Corporate Business

If you operate your business as a corporation but own the business car personally, you have no vehicle deduction possibility without corporate reimbursement, because the Tax Cuts and Jobs Act does not allow employee business expenses for years 2018 through 2025.

Q&A: Is a Triple Net Lease to a C Corporation QBI?

You operate your professional practice as a C corporation. Your spouse rents your office to your C corporation on a triple net lease. Does your spouse qualify for the Section 199A deduction on the rental income, and if not, what can be done about it?

Employee Recreation and Parties Survive TCJA Tax Reform

When you know the rules, you can party with your employees and deduct 100 percent of the cost. Interestingly, if you feed your employees during a training program, your deduction is only 50 percent. Make sure you know the rules that give you the 100 percent deduction for employee entertainment.

Q&A: How to Calculate and Improve Your QBI from a Partnership

It’s tough to calculate the Section 199A deduction. Under the final regulations, it’s even more difficult, with more adjustments than we expected. We’ll walk through an example of a partner in an LLC to show you how the calculation works. And then we’ll discuss some planning opportunities to increase the deduction.

TCJA Tax Reform Creates Big Hazard in Loans to Your Corporation

Making loans to your corporation became more hazardous 33 years ago with the Tax Reform Act of 1986. That was pretty awful. But the new Tax Cuts and Jobs Act tax reform made things worse for tax years 2018 through 2025. If you operate your business as a corporation, you need to know how the rules apply when you loan money to your corporation.

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.

IRS Clarifies Net Capital Gains in Final 199A Regulations

New tax code Section 199A can give you a tax deduction of up to 20 percent of your taxable income reduced by net capital gains. Last August, the IRS issued Section 199A proposed regulations that gave you some guidance on what net capital gains are. And now the new final regulations give you clarifying guidance on what the IRS deems are net capital gains for purposes of Section 199A.

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.

IRS Creates a New “Safe Harbor” for Section 199A Rental Properties

The Section 199A 20 percent tax deduction is a possible gift from lawmakers. Literally, you don’t earn this deduction; it’s simply there for you if you qualify. Under the trade or business rule, your rental property profits can create the deduction. And now, under an alternative rule, you can use the newly created IRS safe harbor to make your rentals qualify for the deduction.

IRS Section 199A Final Regs Shed New Light on Service Businesses

The IRS issued final Section 199A regulations that contain some new and very favorable provisions that are important to out-of-favor specified service trades and businesses. Of particular note are the de minimis rules discussed in this article that show you how to break your business into two or more businesses for purposes of the Section 199A tax deduction.

For 199A Tax Deductions, Must Landlords Give 1099s to Vendors?

Get ready. You may be about to experience another encounter with the law of unintended consequences. The Tax Cuts and Jobs Act gives you a possible 20 percent tax deduction on your rental property income. But that’s only if your rental property is a trade or business, and that comes with its own burdens.

New Downloadable Section 199A Tax Deduction Topic Guide

What do you need to know about the new 20 percent tax deduction that’s available to you if you have ownership in a pass-through business such as a proprietorship, a partnership, an S corporation, a trust, an estate, and certain rental properties? Find the information you are looking for with this downloadable PDF.

Tax Reform’s New Qualified Opportunity Funds: Helpful or Hype?

Qualified opportunity funds are a new tax-planning strategy created by the Tax Cuts and Jobs Act tax reform. The new funds have the ability to defer current-year capital gains, eliminate some of them later, and then on the new investment make capital gains tax-free. To put the benefits in place, you need to navigate some new rules and time frames.

TCJA Tax Reform Sticks It to Business Start-Ups That Lose Money

The Tax Cuts and Jobs Act tax reform added an amazing limit on larger business losses that can attack you where it hurts—right in your cash flow. And it works in some unusual ways that can tax you even when you have no real income for the year. When you know how this ugly new rule works, you have some planning opportunities to dodge the problem.

Seven Answers to Your Section 199A Questions

The Tax Cuts and Jobs Act tax reform added new tax code Section 199A that gives owners of pass-through businesses a possible 20 percent tax deduction on business income. Inside the rules for qualification, you find some complications that give rise to many questions. In this article, we answer seven of those questions.

Defeating the Kiddie Tax after the TCJA Tax Reform

If your family has trouble with the kiddie tax, you face some new wrinkles for tax years 2018 through 2025 thanks to the Tax Cuts and Jobs Act tax reform. This is one of the many areas where tax planning can pay off, as you will see in this article.

2018 Last-Minute Vehicle Purchases to Save on Taxes

Here’s an easy question: Do you need more 2018 tax deductions? If yes, continue on. Next easy question: Do you need a replacement business vehicle? If yes, you can simultaneously solve or mitigate both the first problem of needing more deductions and the second problem of needing a replacement vehicle, but you need to get your deduction in place on or before December 31, 2018. This article helps you find the right vehicle for the deduction you desire.

2018 Last-Minute Section 199A Strategies

Starting now, this year (2018), you have to consider your Section 199A deduction in your year-end tax planning. If you don’t, you could end up with a big fat $0 for your deduction amount. We’ll review four year-end moves that (a) reduce your income taxes and (b) boost your Section 199A deduction at the same time.

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.

How the TCJA Tax Reforms Hammer Personal Casualty Loss Deductions

The Tax Cuts and Jobs Act makes claiming a tax deduction for a personal casualty loss more difficult. And when you do qualify to deduct a personal casualty loss, you face a number of rules that add to your misery by making the loss deduction difficult. In select circumstances, you can use a safe harbor, which makes things a little easier.

Q&A: Tax Reform and the Cannabis Industry

Tax reform made a lot of changes that impact your choice of entity for your business. And if your business is in the cannabis industry, this is especially true. We’ll explain how Section 199A and other Tax Cuts and Jobs Act provisions impact your entity choice for a cannabis business.

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.

Q&A: Statutory Insurance Agent Wins the 199A Tax Deduction

The life insurance sales professional who receives a W-2 with the statutory employee box checked is in a special tax category for income and employment tax purposes and also sits in a favored category under the new Section 199A deduction rules. But he or she may not be favored for 1099 income.

Q&A: Do Triple-Net Leases Qualify for a 199A Deduction?

The proposed Section 199A regulations give us guidance on whether rental activities qualify for the 20 percent deduction. If you use triple-net leases for your rental properties, you may wonder if you’ll get your deduction. We’ll discuss what we know and whether triple-net leases qualify for the deduction.

New IRS Regs: Does Your Rental Qualify for a 199A Deduction?

Section 199A gives you up to a 20 percent tax deduction for your pass-through business income. Do your rental activities count? We’ll go over what the proposed Section 199A regulations say about your rental activities and whether those activities qualify you as an individual for this possible 20 percent tax deduction.

Use a Conservation Easement Donation to Create a $63,000 199A Deduction

If you have high income and operate an out-of-favor specified service business, you may think your Section 199A deduction is gone for good. But there is hope: we’ll explain how a conservation easement may be the solution to your problem. And if the numbers work out, you could get a large tax windfall in the process.

New IRS 199A Regulations Benefit Out-of-Favor Service Businesses

Section 199A provides a valuable 20 percent tax deduction but denies it to certain “out-of-favor specified service businesses” when individuals have taxable income greater than $207,500 (single) or $415,000 (married). New IRS regulations are a welcome sight because they give more clarity and add leniency as to which businesses are out of favor (and which are not).

How to Find Your Section 199A Deduction with Multiple Businesses

Calculating your Section 199A deduction with one business is complicated. When you have multiple businesses, including businesses with losses, it gets even worse. We’ll clearly explain the rules related to multiple businesses along with how the new proposed regulations may allow you to aggregate certain businesses.

Q&A: Guide to Published TCJA Tax Reform Articles

Here’s a resource guide that gives you the Tax Cuts and Jobs Act tax reform articles published at the Bradford Tax Institute from January 1 through July 31, 2018, including for each article the (a) topic, (b) code section, (c) prior law, (d) new law, and (e) link.

How Capital Gains Can Destroy the New 199A 20 Percent Tax Deduction

As you likely already know, your Section 199A deduction depends on where you fall in the qualification process. For example, one qualification process is income below the thresholds that qualify you for the Section 199A deduction on your pass-through income regardless of business type. Another process is income in the phase-in range that qualifies you for a phase-in deduction. Here we explain what that income is and how it impacts your new tax reform Section 199A deduction.

IRS Clarifies Reasonable Comp. for S Corp. Owner’s 199A Tax Deduction

In early August, the IRS released its proposed regulations on new tax code Section 199A—the tax code section that created the 20 percent tax deduction that applies to S corporations and other pass-through entities. The good news in the new IRS regulations for S corporation owners is increased clarity on how to treat reasonable compensation for the Section 199A tax deduction.

TCJA: Convert Personal Vehicle to Business and Deduct up to 100%

Tax reform under the Tax Cuts and Jobs Act gives you bonus depreciation and favorable rules for converting your personal vehicle and other assets to business use. On the conversion, you can immediately qualify to deduct up to 100 percent of today’s fair market value on your existing personal vehicle.

Q&A: New Guide; How Tax Reform Transforms S Corporation Taxes

The Tax Cuts and Jobs Act (TCJA) has changed the way you can look at the S corporation as a tax planning entity. With the new Section199A deduction in play, the S corporation can help increase or decrease that deduction. To make this easier for you, simply download our new guide and get up to speed on how the S corporation works with the TCJA.

Q&A: Did Goodwill Take a Hit under Tax Reform?

Tax reform changed the tax treatment of certain self-created intangible property. Does this affect goodwill? We’ll review the tax treatment of goodwill in light of tax reform.

Q&A: Qualified Improvement Property Snafu?

Congress created the qualified improvement property category in the Tax Cuts and Jobs Act with the idea that you could fully expense such qualified property with bonus depreciation. But Congress made an error in the law, and now you can’t use bonus depreciation for qualified improvement property. Don’t worry—we’ll explain how you might be able to fully expense it anyway.

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.

Be Alert to the TCJA Tax Reform Attack on IRA Recharacterizations

The TCJA eliminates your ability to unwind a traditional IRA or other retirement plan transfer to a Roth IRA. This requires a change in your decision making for such transfers.

TCJA Changes Affecting Partnerships and LLCs and Their Owners

The Tax Cuts and Jobs Act made several beneficial changes that affect partnerships and their partners and LLCs and their members that are treated as partnerships for tax purposes.

Q&A: 199A Calculator Error Fixed

One of our members found an error in our 199A calculator. We thanked the member, fixed the calculator, and made technical corrections to the two articles affected (which we identify in this Q&A).

Tax Reform Doubles Down on S Corporation Reasonable Compensation

Tax reform gave you a new 20 percent deduction on pass-through income. For S corporation owners, your reasonable compensation plays a key role in determining your Section 199A deduction. Here, we’ll explain what the law says on reasonable compensation and how you can come out ahead.

Reduce Your Taxes: Make Your Spouse a Business Partner

Tax reform changed the rules of the game when choosing your best tax structure. A properly structured spousal partnership could now be your best choice, even over the S corporation in some circumstances. But beware, you need to navigate nuances in the law to do this correctly.

Tax Reform (TCJA) Expands Your Section 179 Deduction Privilege

The new and improved Section 179 deduction gives you more ways to take advantage of immediate tax deductions. It’s somewhat like having a flexible tax shelter in your back pocket for when you need it (and also need the property, of course).

Q&A: Does My Spouse Rob Me of My New Section 199A Tax Deduction?

When it comes to the new 20 percent Section 199A tax deduction, does a spouse in an out-of-favor business taint the Section 199A for you? The good news is no. But because of the multiple businesses, you may have a problem on the taxable income front.

How to Beat Some of the New TCJA Limits on State Tax Deductions

Tax reform went hard after your state and local tax deductions. The reduced deduction for your state income taxes has some states pretty riled up. The IRS is about to issue regulations that conflict with what the states are attempting to do. From your standpoint, count on the IRS winning for the moment, and use the clear planning opportunities you have available to you that will create more deductions for your property taxes.

TCJA Tax Reform Q&A: Does Moving W-2 Income and Employee Business Expenses to Schedule C Increase Taxes?

If you can qualify to move your W-2 income to Schedule C so as to enable those legitimate business expense deductions that you are losing to tax reform, should you do it? Maybe. You need to run the numbers to see if the new Schedule C taxes outweigh the monies you lost by not being able to deduct employee business expenses.

Don’t Let the Cliff Kill Your New Section 199A Tax Deduction

How will you fare with the new Section 199A tax deduction? This article can help you make sure that you realize the 20 percent deduction. It’s simply a tax gift if you qualify. And you can do some planning to help you qualify, but you may have to start now.

Tax Reform Update on Strategy for Business Meals with Clients and Prospects

Should you deduct your client and business meals in spite of the Tax Cuts and Jobs Act? This article explains why that is what you should do and gives you reasons for doing it.

Do Your Business Losses Make You an IRS Target? If So, Do This

The tax law has always treated your hobby activities unfairly. Tax reform under the Tax Cuts and Jobs Act made that unfair treatment even worse by preventing you from deducting any business expenses against hobby income. In this article, you see a strategy that can save your bacon on your hobby activity.

Divorce? Alimony? Tax Reform Says Get Divorced Now—Don’t Wait

Learn how the Tax Cuts and Jobs Act changes the alimony rules and what you need to do at this moment if you are in the process of getting a divorce and paying alimony. If you don’t act quickly, your cost of alimony could double.

Four Ways to Deduct Your Legal Fees after Tax Reform

Tax reform made it more difficult for you to deduct your legal fees. But don’t worry: the tax law still allows for a full deduction of your legal fees in certain circumstances. We’ll review four ways you can continue to deduct your legal fees after tax reform.

Proving Travel Expenses after Tax Reform

Whether you operate your business as a corporation or as a proprietorship, you need to record your tax-deductible travel expenses in an IRS-approved manner. This means you need to know technically what a receipt is—and when you do or do not need one. By the way, the credit card statement is not a receipt.

Tax Reform Increases the Tax Benefits of Employing Your Child

If you or you and your spouse own your business and you have children, you need to consider the financial benefits of hiring those children to work in your business. Some businesses benefit more than others, but almost all businesses likely come out ahead with this strategy. And every business needs to thank tax reform for the new increased standard deduction that a business owner’s child can use to pay zero in taxes.

Q&A: Loophole to Deduct Hobby Expenses after Tax Reform

Tax reform killed the ability for you to deduct expenses for your hobby activity. But if you sell items in your hobby activity, the IRS allows you to deduct the cost of those items—if you do this the right way. Not knowing this rule can cost you thousands of dollars in extra taxes.

 

Tax Reform Makes Professional Gamblers Who Lose Money Suffer More

If you’re a professional gambler, tax law did you no tax favors before tax reform. But now, because of tax reform, tax law has you between a rock and a hard place for tax years 2018 through 2025. The recent tax reform gives you one choice only for those years.

Good News: Tax Reform Lands a Blow to AMT

You likely have to worry about alternative minimum tax (AMT) in addition to the regular federal income tax. Tax reform made changes to the tax law that significantly impact AMT. The changes could mean more money in your pocket and less going to the government.

Q&A: New Section 199A Guide

The new Section 199A deduction created by tax reform is a source of excitement and confusion for tax professionals and small-business owners alike. Download our new guide and get all the details.

Tax Reform Does Much to Help Your Rental Real Estate

The recent tax reform, known as the Tax Cuts and Jobs Act (TCJA), added some good benefits to your real estate rentals, both commercial rentals and residential rentals. Notably, your qualified business income from your real estate rentals creates a possible 20 percent tax deduction with no effort on your part. And if you want less taxable income, the TCJA gives you enhanced bonus depreciation and new avenues for Section 179 expensing.

Did Tax Reform Goof When Disallowing Deductions for Client Meals?

We, you, and just about everyone else have been looking for a ray of sunshine that would allow tax deductions for business meals with clients and prospects. In this article, you learn that lawmakers may have intended to grant deductions for business meals with clients and prospects in spite of how they put together the Tax Cuts and Jobs Act.

Tax Reform Punishes W-2 Employees—Get Even!

The recent tax reform created both winners and losers. One big loser is the W-2 employee who incurs out-of-pocket business expenses to earn his or her W-2 income. Tax reform simplified those W-2 employee business expense deductions by simply making them not tax deductible.

Tax Reform Attacks Home Mortgage Interest Deductions

The home mortgage interest deduction rules did not fare well in the recent tax reform. First, a chunk of your home equity mortgage interest is no longer deductible. Second, you now face a new lower ceiling on mortgages that can qualify for the home mortgage interest deduction.

Helicopter View of Meals and Entertainment After Tax Reform

Tax reform has had a significant impact on the tax deductions you can now claim for business entertainment and meals. The chart in this article shows you how the Tax Cuts and Jobs Act treats 12 meal and/or entertainment events.

New Section 199A Tax Reform Calculator for Your Use

The new 20 percent tax deduction under new tax code Section 199A has many nuances based on your type of business, taxable income, qualified business income, wages, and depreciable property. Here you have an easy-to-use Section 199A calculator that takes away the pains of manually computing your possible benefits.

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.

Tax Reform: Wow, New 20 Percent Deduction for Business Income

The new 2018 Section 199A tax deduction that you can claim on your IRS Form 1040 is a big deal. There are many rules (all new, of course), but your odds as a business owner of benefiting from this new deduction are excellent.

Tax Reform Sticks It to Doctors, Lawyers, Athletes, Traders, and Others

The new Section 199A deduction is a very nice tax break for business owners, except for owners with high income who also fall into the out-of-favor group. In general, the out-of-favor group includes lawyers, doctors, accountants, tax professionals, consultants, athletes, authors, security traders, actors, singers, musicians, entertainers, and others.

Tax Reform Eliminates Tax Benefits of Business Vehicle Trade-Ins

Tax reform no longer allows Section 1031 exchanges on personal property such as your business vehicle. The trade-in was the most common 1031 exchange of a business vehicle. Now, because of tax reform, the vehicle trade-in is simply the sale of the old vehicle to the dealer and the purchase of a new vehicle. The sale to the dealer creates gain or loss on the sale just as it would on an outright sale.

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: Entity Choice—Proprietorship or S Corporation?

Will your business operation create the 20 percent tax deduction for you? If not, and if that is due to too much income and a lack of (a) wages and/or (b) depreciable property, a switch to the S corporation as your choice of business entity may produce the tax savings you are looking for.

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: Will Section 199A Phase In or Phase Out Your 20 Percent Deduction?

If your pass-through business is an in-favor business and it qualifies for tax reform’s new 20 percent tax deduction on qualified business income, you benefit at all times, including being above, below, or in the expanded wage and property phase-in range. On the other hand, if your business is a specified service trade or business, it is in the out-of-favor group and you benefit only when you are in or below the phaseout range.

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.

Warning! The IRS Is Outsourcing Tax Debts to Private Debt Collectors

A new law requires the IRS to send its inactive tax debts to third-party private debt collectors. If this happens to you, you need to know how this program works including what to expect and what rights you have.

Unpaid Taxes? Goodbye Passport

If you have “seriously delinquent tax debt,” IRC Section 7345 requires the IRS to certify that debt to the State Department for action against you. The State Department then must refuse to issue or renew your passport, or it can revoke or limit the use of your current passport. To get your passport back, you need to get right with the IRS.

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.

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.

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.

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.

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.

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.

Secrets of Collecting Residential Solar Tax Credits from the IRS

Your government offers a very generous subsidy, a 30 percent tax credit, if you install solar equipment at one or more of your residences. And if you live in the right area of the country, you can come out well ahead on this deal. But this is tax law, and as you would expect, there are some tricky rules that you need to follow to qualify for the credit.

Q&A: Social Security Loophole Closing: Act Immediately

 

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.

When You Can (and Can’t) Deduct Mortgage Insurance

When you buy a house with less than 20 percent down, your lender will almost always force you to buy mortgage insurance. This protects the lender in case you default. Tax law used to help a lot people with the cost of mortgage insurance by allowing a deduction to certain taxpayers. That selective help on personal homes expired in 2013, but there’s hope for an extension, and existing deductions continue for your rentals and office in the home.

Does Your Section 105 Plan (HRA) Work for You after Obamacare?

The new 2014 Obamacare tax rules that apply to health reimbursement accounts (HRAs) such as Section 105 medical reimbursement plans make it difficult and impractical to have a Section 105 plan or other HRA when you have two or more employees. But if you have no employees or only your spouse as an employee, you escape the jaws of Obamacare and your Section 105 or other HRA plan gives you all the good tax benefits that you had before Obamacare.

Own Rental Property? Escape the Obamacare Tax—Use New IRS Rules

Are you subject to the new 3.8 percent Obamacare tax? Do you own rental property? If so, use one of the three escapes in this article so that your rental property can avoid the 3.8 percent tax. The three escapes revolve around the concept of a rental property as a trade or business property. The IRS just released new safe-harbor rules making it easy for some owners of rental real estate to qualify their rentals as trade or business property exempt from the 3.8 percent tax.

Five Strategies to Avoid the New 3.8 Percent Obamacare Tax

The new 3.8 percent Obamacare tax on investment and passive income makes its debut on your 2013 tax return. Are you ready? Have you made a plan to avoid or minimize the tax? You should. And you can. In this tax-planning article, you’ll find five real-world tax reduction strategies to keep your money safe, happy, and in that place where it belongs—your pocket.

Weird, But Higher Tax Rates Increase Rental Property Profits

Our rental property analyzer reveals the truth about your rental property and gets you to bottom-line results that you can fully understand. The new higher tax rates impact your rental property. We suspect that you already knew that. But did you know that the higher tax rates could give you a better bottom line (i.e., more after-tax cash in your pocket from the investment)? This article explains how higher taxes work to your benefit.

Pay More Taxes Now

The fiscal cliff is coming on December 31 unless lawmakers do something. What does that mean to you? Does it mean you should pay more taxes this year? Perhaps. For insights into what you need to consider, read this article.

Tax Loss Crushed by Passive Loss Rules on Rental Property Investment

If you own rental property, you need to pay attention to the passive-loss rules. This court case helps clarify two rules that can enable deductions for rental property losses.

Tax Tips for the New Estate and Gift Tax Rules

The newly enacted tax cut creates a new 2011 and 2012 estate tax. The new rules are taxpayer friendly in two respects. First, they are easy to understand. Second, they contain a $5 million exclusion (portable, if properly elected, for husband and wife, giving a married couple an exclusion of $10 million).

Tax Tip: With the New Tax Law, What’s Best—IRS Mileage Rates or Actual Expenses?

The new tax law contains some real surprises when it comes to deducting vehicles. In some cases, you can deduct the full cost in the year you place the vehicle in service. In other cases, the luxury auto limits might stretch your depreciation deductions over 30 or more years.

IRS Says No Tax Credit on Health Insurance Premiums Paid for the Proprietor’s Employee-Spouse

New guidance from the IRS on the new health care law says the owner of a business (proprietorship, corporation, LLC, etc.) may not claim the 35 percent tax credit on the health insurance premiums paid to cover his or her spouse.

New Health Care Law Requires Strategy Change for Section 105 Vitamin Deduction

The new health care law changes the requirements for deducting vitamins in your Section 105 medical reimbursement plan.

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 Rules on Allowable Section 105 Medical Plan Reimbursements for Over-the-Counter Drugs

The IRS just clarified the Section 105 medical reimbursement plan rules for deducting over-the-counter drugs in 2011. Read this article to get updated. Then, download a sample Section 105 medical reimbursement plan document that your business can use to comply with both 2010 and 2011 requirements.

How the New Health Care Law Treats You, the Owner of a Small Business

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.

How Much Does the New Health Care Law Cost You?

Most of this issue explains how you pocket money from the new health care tax credits. That’s nice. But you have to ask, who is paying for my tax credits?

How Often Can the IRS Audit?

The IRS has a procedure in place where you can ask “not to be audited” this year for the same items for which you were audited last year.

Big, Unlimited 2009–2016 Tax Credits for Installing Solar, Wind, or Geothermal

This new law gives you 30 percent uncapped and unlimited tax credits for installing qualified solar, wind, or geothermal energy improvements in your home, vacation home, or other residence.

About Time! A True Tax Credit for First-Time Home Buyers

Higher inflation could be good for that home you buy today—and if you buy today, you will have today’s low interest rate. That’s a pretty good combination. Then add the 2009 tax credit and get the government to pay you $8,000 for taking the chance. Sounds like you hit the trifecta doesn’t it?

How the 2009 Stimulus Package Can Stimulate Your Business Deductions

The official name of the new stimulus is the American Recovery and Reinvestment Act of 2009 (Public Law 111-5). Like last year’s version, the 2009 stimulus contains three big deals for business: (1) fifty percent bonus depreciation; (2) Section 179 expensing of up to $250,000; and (3) an increase in first-year luxury car depreciation on new (not used) cars.

The One Time to Avoid the 1031 Exchange

The very first thing you need to do once you make the decision to buy the new asset and replace the old asset is to calculate your taxable gain or deductible loss on the old asset (as if you were going to sell it right now). The result—gain or loss—determines the strategy you should follow.

Your Business Stimulus Expires Soon

Take advantage of the government stimulus package in 2008. You need to buy and place in service a business vehicle, business equipment, or a business-related building before the end of the year. Generate fifty percent bonus depreciation, up to $250,000 Section 179 expensing, or an $8,000 increase in first-year luxury car depreciation.

Bailout for Incentive Stock Options

After buying stock with incentive options, many choose to gamble with the capital gains treatment. By holding on to the stock for one year, one can save money with the AMT. But, when the dot-com bubble burst, many people lost a lot of money with this gamble. Read about this, and how the government is now bailing them out!

Preferred Stock Bailout for Banks and Other Financial Institutions

The big $700 billion bailout is right in your face, but there’s more. There are also billions of dollars in side bailouts, including the preferred stock bailout, which helps out owners of preferred Fannie and Freddie stock. Only some financial institutions benefit though, you don’t.

Tax Cheats Steal $58 Billion of Your Money

Over 1.6 million businesses collectively owe the IRS more than $58 billion. Who to blame: cheating government contractors, a lenient IRS, irresponsible lawmakers, dishonest businesses. What to do, and how to protect yourself against a dishonest payroll service.

No Extension for Extenders

Extenders delay the expiration of a tax law for one year, effectively hiding huge amounts of government spending. Currently, the government is hiding almost $100 billion of spending with extenders. Learn about how they effect small business, and what you can do to stop this type of spending.

Rangel to Pay Back Taxes

NY Congressman Charles Rangel failed to report foreign earnings. Rangel is the chief tax legislator in the country. He should know better.

Fix for Charity Mileage Rate?

Lawmakers finally let the IRS deal with deducting charitable mileage! The IRS annually updates its deduction rates for mileage, but lawmakers haven’t updated their charitable mileage rate since 1997. Read how a new law applies the IRS rates for charitable mileage, and how this affects you.

New Housing Rescue Law Destroys Vacation and Rental Home Sales Strategy

Before this new housing rescue law, the savvy taxpayer could convert his old rental or vacation home into a principal residence, live in it for two years, and then sell it to take advantage of the $250,000 and $500,000 exclusion of gain rules. Now, you need to make revisions to that old tax plan to cope with this new law.

New Tax Breaks and Traps in Housing Rescue Law

The new housing rescue law (1) creates a $7,000 tax credit for first-time home buyers; (2) creates up to a $500 property tax deduction for the taxpayer who does not itemize deductions; (3) destroys some or all of the $250,000 tax-free exclusion for sales of vacation homes and rentals converted to principal residences; and establishes 1099-style reporting to the IRS of gross income from credit card receipts.

Wow! Proposed Common-Sense Legislation

Help this new bill pass into a law. H.R. 6601 proposes reasonable reform on home office use, cell phones, and business meals and entertainment.

GAO Tells Senate: “Fiscal Outlook Is Bleak and Action Is Needed to Avoid Serious Economic Disruption”

In testimony before the Senate on January 29, 2008, the Government Accountability Office (GAO) said: “Under any plausible scenario, the federal budget is on an imprudent and unsustainable path. This budget imbalance will necessarily result in tax increases and spending cuts. (And all this is before Treasury Secretary Paulson’s first $700 billion bank bailout.)

 

AMT Patched, Mortgaged

In what is becoming an every year outrageous event, lawmakers patched the alternative minimum tax (AMT), adding $50 billion to the federal deficit.

 

Lawmakers Increase Penalties

To pay for the “Heroes Earnings Assistance and Relief Tax Act of 2007,” lawmakers increased the minimum penalties for failing to file a tax return.

 

Putting Tax Practitioner’s Feet to the Fire

A new law makes tax preparers subject to higher penalties for errors, and establishes high standards for claims made on tax returns. The moral: if your tax advisor examines your issue and tells you that you can claim that deduction, you have a very solid claim.

Goodbye, SUV Expensing?

The $25,000 SUV expensing might disappear in 2008. We won’t speculate on what might happen next year, but the current rules still apply until the end of 2007.

Taxation of Social Security

Be alert to, and beware of, government studies. The result of a tax study is almost always bad news for you. In this case, we foresaw the problems with the 1986 tax “reform.” What’s on the radar next: the new social security study group and the AMT.

Extenders Extended Again

Extenders delay the expiration of a specific tax law, which hides budget costs and allows lawmakers to shirk their responsibility to make good law. We summarize the current extenders to inform you of where you stand with the tax law.

Extenders Law Adds New Extender for Mortgage Insurance

In the latest installment of gimmicky extenders, lawmakers have created a one-year tax benefit window for deducting mortgage insurance. What are the lawmakers thinking? Presumably, they hope the mortgage insurance deduction will boost the housing market in 2007. If this works, look for an extension to 2008.

Does the SUV Built on a Unibody Frame Qualify for $25,000 Expensing?

You may Section 179 expense up to $25,000 of your business cost when you buy a more than 6,000 pound gross vehicle weight rated (GVWR) new or used crossover vehicle or SUV built not on a truck chassis, but on a unibody frame in a manner that qualifies the vehicle as a truck for purposes of the gas guzzler tax.

Fiscal Lunacy Award #9

By using outside collection firms instead of IRS personal, the government is going to lose $8.6 billion a year in revenue.

Fiscal Lunacy Award #17

Government whacks 157 estate tax lawyers at a cost to taxpayers of $2.6 million a day.

700,000 Fail to Claim Sales Tax Deductions

Lawmakers enacted a special two-year sales tax deduction to benefit taxpayers who live in states with no income tax. According to the Treasury Inspector General, over 700,000 taxpayers failed to claim the deduction.

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.

New Law Attacks and Changes Many Charitable Deductions

Public Law 109-280 makes tax deductions for donations to charity far more difficult. Here is one example of the changes: dropping $5 in the collection basket at Church on Sunday is no longer deductible. Now you need a cancelled check or a receipt to claim that deduction.

The AMT Attack Creates Two Surprise Casualties

The AMT taxes the deductions you claim on your regular tax return. For example, the AMT taxes the deductions you claim for state income and sales taxes. Further, the AMT taxes the personal exemptions you claim for yourself, your spouse, and your dependent children. This is not a typo. It’s true. The AMT is the most unfair tax since direct confiscation of assets.

Heavy SUVs Still Tax Favored

Tax law continues to favor the heavy SUV over the typical passenger automobile. The heavy SUV qualifies for additional first-year expensing of up to $25,000 and it’s exempt from the gas guzzler tax.

New Law’s $70 Billion in Tax Cuts Requires Little Planning

For most self-employed taxpayers, Public Law 109-222 requires no major shifts in tax planning for their businesses. This new law extended tax breaks, such as the lower rates for capital gains. The increase in the kiddie tax age group is probably the biggest impact of this new law on the one-owner and husband-and-wife owned business—and that age expansion has little or nothing to do with most business deductions.

Long-Term Capital Gains Trigger AMT

The AMT can trigger additional taxes on your capital gains despite the fact that the capital gains tax rate for both regular and AMT purposes is identical. Your status as single or married and the amount and nature of your income determine the extra AMT hit. In general, the middle income can suffer the worst AMT impact.

New $94,200 Base for Self-Employment Creates Need for Better Planning

In 1935, the self-employment tax topped out at $60. In 2006, the first part of the self-employment tax tops out at $14,413, but the 2.9 percent Medicare part continues after that without limits. Good tax planning for the self-employment tax is like an annuity. It gives you monetary returns—year after year—every year you are in business. So, plan now and consider everything from choice of entity to hiring your children.

Beware of Tax Reform

Tax reform always sounds great. For example, the 1986 Tax Reform Act dropped the top tax rate from 50 percent to 28 percent. That sounded great. But this tax reform also reduced the after-tax rate of return on a real estate investment by 60 percent. If you were making a 20 percent return on your rental before the reform, you were making 8 percent afterwards. Students of this tax law sold their properties before the nonstudents heard about this cut in profits.

Estate Planning for 2006 and Beyond

Current law deletes the federal estate tax in 2010 and then reinstates it at higher rates in 2011. The year 2010, when there is no estate tax, contains its own unique planning requirements. If you are concerned about taking care of your loved ones and protecting what you have worked so hard to build, free your mind of a major worry by getting your federal estate plan in order.