October 2024
Three Possible Ways to Deduct Your Dog or Cat
Family pets are never deductible. But expenses for dogs, cats, and other animals can be deductible if the animal qualifies as a medical expense, business expense, or charitable deduction.
Got IRS Penalties? Know the Rules, Pay Nothing
If you got a bill from the IRS saying you owe a penalty, don’t pay it just yet. This guide can help you get those penalties removed—or even get a refund if you’ve already paid. The IRS can charge hefty penalties if you or your company files tax returns late, doesn’t pay taxes on time, or fails to deposit your employment taxes. We’ll show you how to get these penalties removed by using the right approach and keywords.
Know the Three Ways the Tax Law Treats Personal Property Rentals
Tax treatment for renting equipment and other personal property depends on whether the activity qualifies as a business or a for-profit activity. Rental business income and expenses are reported on Schedule C and subject to self-employment tax. Rental for-profit activity income and expenses are reported on Schedule 1 and not subject to self-employment tax.
New Road Map for Disputing an IRS Disallowance of Your ERC
The IRS recently announced a significant update regarding employee retention credit (ERC) claims. You now have two years to appeal an IRS disallowance, as a webpage published on September 19, 2024, explains. This is great news compared with the typical 30-day deadline, but it’s important to understand the new risks.
List of Popular Vehicles with GVWRs Greater Than 6,000 Pounds
As you likely know, vehicles with gross vehicle weight ratings (GVWRs) greater than 6,000 pounds get the best tax breaks. In this article, we give you a list of some of the popular vehicles that qualify for these breaks.
Beware of Tax Refund Offsets
Taxpayers’ federal income tax refunds can be taken by the federal government to satisfy outstanding debts for child or spousal support, state income tax, school loan defaults, unemployment compensation debts, and other debts owed to federal agencies. The IRS can also deduct unpaid taxes from refunds
HSA Secrets for Seniors: Contributions beyond Age 65
Most people must stop contributing to their health savings accounts when they turn age 65 and apply for Medicare. But if you have (or your spouse has) a large employer HSA-eligible health plan, you may be able to continue making contributions until you’re close to age 70. To do so, you must not collect Social Security or enroll in Medicare.
QBI Deduction: Maximize It Before It’s Gone
Learn how to make the most of the qualified business income (QBI) deduction before it expires in 2025. This article outlines the basics of the deduction, potential limitations, and practical strategies to help you maximize your benefits. If you’re a business owner or high earner, this is a timely opportunity to review your options and make informed tax planning decisions.
Distribution of Average Tax Rates by Income
Congress is at it again, thinking of new ways to change the tax system. And since this is an election year, there’s lots of that talk. To provide some clarity, this article shows the average tax rates that high- and low-income earners pay for income, payroll, excise, and corporate taxes.
September 2024
BOI Latest Updates for Dissolved and Disregarded Entities
FinCEN released new FAQs clarifying when corporations and LLCs are dissolved for FinCEN Business Ownership Information reporting purposes, which is different from tax purposes. FinCEN also added clarity to taxpayer ID numbers for single-member LLCs and other disregarded entities.
Employee Retention Credit (ERC) Update
Here are the latest developments on the Employee Retention Credit (ERC). First, the IRS launched a new IRS payback scheme. Second, there is looming legislation that could change the ERC landscape. Third, learn what you need to know if you’re still waiting on your claim.
The Department of Labor Makes It Harder to Hire Independent Contractors
Independent contractors are not covered by the Fair Labor Standards Act, which establishes a national minimum wage and overtime standards for employees. In an effort to require more businesses to pay overtime to workers, the U.S. Department of Labor (DOL) has adopted a new six-factor test that makes it more difficult for you to classify workers as independent contractors instead of employees.
The Supreme Court Likely Shook Up Your Buy-Sell Agreement
If your buy-sell agreement uses company-owned life insurance to buy back your shares after you die, your estate may now have to pay more tax. A recent U.S. Supreme Court decision just increased your company’s estate tax value because of that company-owned life insurance.
Unlock Aircraft Tax Deductions: Overcome Passive Loss Limits
One of the biggest hurdles to deducting losses from the business use of an aircraft is the passive activity loss limitation. Even with careful planning, you might find yourself stuck with passive losses that can’t offset income from other sources. This article details the tax strategies you need to effectively deduct your aircraft losses and navigate the complex passive loss rules.
Tax Deductions for Dues and Expenses of Being a Mason or a Lion
Tax law favors and allows deductions for civic and public service clubs and even names some favored clubs. But tax law does not allow dues deductions for airline, hotel, country, golf, athletic, and business-meal clubs.
The Cost of Trust: A Cautionary Tale for Minority Shareholders
Discover the devastating consequences of misplaced trust in business partnerships, through James Maggard’s story. Learn how a lack of oversight and professional guidance can lead to tax and financial unfairness, even for the most well-intentioned business owners.
Side Fund Increases Benefits When Cutting Social Security Taxes
Increase your Social Security retirement income by reducing your Social Security taxes and investing the savings. Explore how investing your tax savings in a side fund can lead to a higher overall benefit, while preserving essential benefits such as Medicare and spousal support.
Tax Planning to Winter in Florida and Summer in Massachusetts
You can plan your tax-deductible business life to avoid cold winters and hot summers. To do this, you need to know what a tax home is and where your tax home is located. The good news is that you have just one tax home, unless you are one of those rare individuals who have no physical home.
August 2024
Tax Guide to Deducting Long-Term Care Insurance
You can protect yourself against the financial consequences of chronic illness or disability by purchasing long-term care insurance. The premiums for this insurance are not cheap, but tax law may let you write off some or all of the cost, thus subsidizing your purchase.
Smart Solutions That Decrease Social Security and Medicare Taxes
Rising federal employment taxes, including Social Security and Medicare, are a growing burden for employees, employers, and self-employed individuals. To mitigate these costs, consider operating as an S corporation or utilizing community property state rules for husband-wife businesses. Strategic tax planning can significantly reduce the impact of these increasing taxes.
Protect Aircraft Leasing Tax Deductions from IRS Hobby Loss Rule
Leasing out your aircraft can offer financial benefits, but it also brings tax challenges. Leasing brings into play the ugly hobby loss rule that can destroy all your deductions and also tax you on the gross income. This article explains how to navigate these rules and overcome common tax hurdles associated with aircraft leasing.
Avoiding Tax Pitfalls of Aircraft Ownership in an S Corporation
Are you considering owning an aircraft through your S corporation? Beware of tax pitfalls that could limit your savings. This article explores basis limitations, depreciation recapture, and cost-sharing issues, offering strategic tips to navigate these challenges and maximize your tax benefits.
What Happens When You Die and Your S Corporation Owns the Rental?
What happens when you have a rental property inside an S corporation and you die? First, you have the step-up in basis question. Second, you have the value of the S corporation for your heirs. There’s good news here. Check it out.
Reduce Taxes by Using the Best Cryptocurrency Accounting Method
At a time of surging cryptocurrency prices, many crypto owners are enjoying substantial gains. Where multiple crypto units are sold in the same year, taxable gains can be reduced by using a crypto accounting method that provides the highest possible tax basis for each unit that is sold. This ordinarily requires that crypto owners use a method other than the default method: first in, first out (FIFO).
Avoid the Hidden Dangers of the Accumulated Earnings Penalty Tax
The IRS can impose a 20 percent accumulated earnings tax on C corporations that retain too much in earnings to avoid issuing taxable dividends to shareholders. Corporations can avoid this penalty tax by retaining no more than the accumulated earnings tax credit, electing S corporation status, or retaining no more than necessary for reasonable business needs. Proper documentation is key to avoiding the tax.
Convert C to S Corp: Save Thousands and Avoid BIG Tax Problem
Want to convert your C corporation to an S corporation? You need a plan. No plan equals BIG (built-in gains) tax: 21 percent. Worse, you’ll continue to pay at your regular tax rates on the remaining 79 percent that flows from your S corporation to you. Make a plan to avoid as much of this torturous double taxation as possible, with the four strategies in this article.
July 2024
Claim Up to $32,220 in Missed 2021 Self-Employed COVID-19 Sick and Family Leave Credits Today
Individuals and partners who were self-employed during 2021 were entitled to claim refundable tax credits for sick and family leave if they were unable to work for various COVID-19-related reasons, such as suffering from COVID itself, getting vaccinated, being under quarantine, or looking after family members impacted by the virus. Those who failed to claim the credits with their 2021 tax return need to read this article. The credits can be worth up to $32,220.
1099s for Corporations and Other 1099 Surprises
Curious about when you need to issue a Form 1099 to a corporation? Discover the surprising details and specific reporting requirements for incorporated legal, medical, and other professional services.
Discover the Best Entity for Your Business: Use This Chart
Use this essential Entity Comparison Chart to find the right business entity. It simplifies complex information and highlights key advantages and disadvantages to help you make an informed decision and optimize your business’s financial health!
Know the 15 Exceptions to the 10 Percent Penalty on Early IRA Withdrawals
Early IRA withdrawals—those that occur before age 59 1/2—are generally subject to a 10 percent penalty tax, but 15 exceptions exist to avoid this penalty. The exceptions include withdrawals for substantially equal periodic payments, certain medical expenses, higher education costs, first-time home purchases, and specific emergencies or life events such as disability or terminal illness.
Make Sure Your Real Estate Options Pay Off
You may have heard that options are the perfect way to increase profits on real estate investments and rentals. Well, perfect is probably an overstatement, but good profits are available when you know what you are doing. You also need to know the tax rules to avoid any clauses, charges, and events that can turn options into sales—and trigger taxes when you least expect them.
Tax Deductions for Investments in Raw Land
Purchasing raw land is a great way to get into real estate investing. But your tax deductions are more limited than for improved property. Some expenses are deductible as itemized personal deductions; many others aren’t deductible at all. If you don’t itemize, you get no immediate benefit from your deductions. But if you make the proper annual tax election, your taxable profit will be reduced when you ultimately sell the property.
Deduct 100 Percent or 81 Percent of This Entertainment Facility?
When you qualify to deduct an entertainment facility as a business expense, how do you determine the amount to deduct?
Create Biz Deductions for Your Timeshare—Allow Use by Employees
You have two possible ways to let an employee use your 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.
Shutting Down Your S Corporation
Shutting down your S corporation? Discover the tax implications of selling your stock versus liquidating assets, and learn key strategies to minimize your tax burden. Read this article to unlock expert strategies that help you navigate this complex process with complete confidence.
