Recent Feature Headlines

October 2021

The Govt. War against Independent Contractors: A Progress Report

Businesses can save big by hiring independent contractors. But the rules of the road for this worker classification require that you pay attention. Both the feds and the states want the workers classified as employees. Recently, California’s AB 5 tried to make it significantly harder for businesses to hire independent contractors, but lawmakers have since watered down AB 5 in response to widespread complaints by both independent contractors and businesses. Other states started to follow the California example, but then decided not to do so.

Ready, Set, Depreciate

As a business taxpayer, you can write off the cost of business buildings, machines, and other assets. The write-off comes in one of three forms, and for the most part you can select the form that gives you the deduction you desire. But you need to follow certain rules to trigger the write-offs, as we explain in this article.

PDF Download: Guide to Deducting Travel Expenses

Whether you travel out of town for business by car, airplane, or boat, you need tax knowledge to create some tax-deductible personal fun days. (Yep, you read that right.) This free guide clarifies the tax law so you can not only ensure your travel deductions, but also turn some personal days into deductible business travel days.

Refresher: Principal Residence Gain Exclusion Break (Part 3 of 3)

Part 3 of our three-part refresher course on the principal residence gain exclusion break shows you what happens to the $250,000 ($500,000, if married) exclusion in the case of a divorce or marriage. In a divorce, good tax planning can be necessary if you’re going to retain the exclusion. You will also see what hurdles the government has put in place when you convert a vacation home or rental into your personal residence.

IRS Audit: Short-Term Rentals

When you are under an IRS audit and you need a citation that helps you, where do you find that citation? See what the tax professional in this article found that helped his client win the deduction.

How Are Roth IRA Withdrawals Taxed?

Not all Roth IRA withdrawals are federal-income-tax-free. Some withdrawals are taxable. Even worse, some can be socked with a 10 percent early withdrawal penalty tax, and this can happen even when there’s no income tax hit.

IRS Audit: Both IRS and CPA Wrong on This Rental Property Audit

In this IRS audit, both the IRS and the CPA held the incorrect position that the taxpayer had to materially participate in a rental property for more than 500 hours in order to deduct any losses or cost segregation.

How Are 529 College Savings Account Withdrawals Taxed?

The big advantage of 529 plans is that qualified withdrawals are always federal-income-tax-free—and usually state-income-tax-free too. What you may not know is that not all 529 withdrawals are tax-free qualified withdrawals, even in years when you have heavy college costs.

Be Sure to Know the Tax-Home Rule

When you travel out of town overnight, you need to know the tax-home rule. The IRS defines your tax home, and it’s not necessarily in the same town where you have your personal residence.

September 2021

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.

Is a Property Fix-up and Sale an Investor or a Dealer Property?

If you buy a property, fix it up, and then sell it, is that property a dealer or an investor property? The classification boils down to your facts and circumstances. That makes it a tough call for both you and your tax preparer. And if investor status produces long-term capital gains, you want to avoid dealer status, because that causes ordinary income and self-employment taxes.

Updated 2021 Tax Resource Guide; Download Now

Download this newly updated two-page guide so that you have a handy desktop reference with the 2021 corporate and individual tax rates, estate tax rates, self-employed tax rates, Social Security and Medicare tax rates, capital gain rates, standard mileage rates, standard deductions, luxury auto depreciation limits, and select retirement and IRA limits.

Refresher: Principal Residence Gain Exclusion Break (Part 2 of 3)

Part 2 of our three-part refresher course offers more good news about the principal residence gain exclusion of up to $250,000 ($500,000, if married). In this article, you will find liberal rules that give you a prorated exclusion when you or other qualified individuals experience a change in place of employment, health issues, or unforeseen circumstances. You also will learn how business or rental use affects the exclusion and how to treat vacant land that is part of your personal residence.

1099s Tell Story on Dentist

Here’s a sad story of a dentist who did not file his tax returns. Of course, as you know, the failure to file tax returns often gets the IRS’s attention. In this case, it did, and this dentist suffered accordingly.

NUA Choice: A Tax Strategy to Consider If You Own Company Stock

If you are an employee with company stock in your retirement plan, you can use the net unrealized appreciation tax treatment to save money on your taxes.

Why IRS Audit Technique Guides Are Helpful Business Resources

IRS Audit Technique Guides provide valuable insight as to how the IRS conducts audits. The guides also provide helpful guidance in developing financial best practices for your business.

IRS Private Letter Rulings: Are They Worth It?

The IRS issues private letter rulings (PLRs) to answer taxpayers’ questions about how to apply the tax law to a set of facts or how to obtain relief for late filings and other errors. A PLR is binding on the IRS as to the taxpayer who receives it, but no others. PLRs are expensive, require a detailed application, and can take months to get. You can often find much cheaper and easier alternatives, especially if you need the IRS to waive a missed deadline.

August 2021

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.

Loophole: Harvest Tax Losses on Bitcoin and other Cryptocurrency

How would you like a capital loss storage box that you could call on when you have capital gains that you want eliminated? Your cryptocurrency holdings can create that capital loss storage box without changing the nature of your holdings, as we explain in this article.

PDF Download: Guide to Deducting Meals and Entertainment in 2021-2022

As a business owner, your expenses for business meals and entertainment for most of 2020 were likely little to zero due to COVID-19. But that will probably change for the remainder of 2021 and 2022. And with the new tax law changes, you need to make sure you know the rules so you can maximize your tax savings and deduct up to 100 percent of these expenses.

Know Why the Court Denied Losses on Four of Six House Rentals

When the government allows your rental property losses to offset your other income, it subsidizes your rental property profits. If tax law passive-loss rules deny your current rental losses, your profits go down. Therefore, you need to know how the passive-loss rules work so you can maximize your rental profits and avoid unpleasant visits with the IRS.

Refresher: Principal Residence Gain Exclusion Break (Part 1 of 3)

The $250,000 ($500,000, if married) home sale gain exclusion break is one of the great tax-saving opportunities. Although the tax code contains many rules on this tax break, most of them are easily understood, especially as we explain them in this article.

Payroll Taxes Embezzled; Owner Has Huge Business and Tax Problems

Do you own a business that withholds taxes from employees? If so, you need 100 percent assurance that the withheld payroll tax monies are going to the IRS and not into the pockets of an embezzler. This article explains how you can obtain such certainty.

Big Mistake: Filing Your Tax Return Late

What one mistake can you make with your taxes that will cause you to pay penalties of up to 47.5 percent? And when might that not even be the worst part? What could be worse than a 47.5 percent tax penalty? How about both the penalty and a full-blown IRS audit? That’s far worse.

Tax Savings for Married Taxpayers Claiming Section 179 Deductions

If you are married, you need to consider your spouse’s W-2 and other income sources in your Section 179 expensing eligibility. The inclusion of your spouse often enhances the amount you can deduct using Section 179 expensing, as we explain in this article.

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.

July 2021

Two Ways to Fix Tax Return Mistakes Before the IRS Discovers Them

It’s easy to make a mistake on your tax return. The tax law is complicated and always changing. If you did make an error, it’s not the end of the world. The tax law gives you two ways to undo your mistake at little to no cost to you. We’ll go over the two ways and how you can use them to your best advantage.

IRS Makes Income Limit Mistake on the Home-Office Deduction

What happens if the IRS makes a mistake in its publication or instructions? Is this your problem? How would you know if the IRS made a mistake? This article explains a mistake on the gross-income limit in the IRS home-office publication. Make sure this mistake is not costing you money.

Find the Winning Tax Law for Your IRS Audit

If you are suffering or about to suffer an IRS audit, you should know how your tax positions stack up against the IRS examiners’ positions. In most cases, you are discussing the facts, not the law, and you prove your facts with receipts, canceled checks, and logbooks. Once you get into the law, however, you need to know the rules that trump other rules. This article explains how you use the tax law, rulings, and other IRS documents to prove the legal side of your case in an audit. And this article helps you understand what the courts are looking for, should your case advance beyond the IRS audit to the courts.

How the IRS Lost $55,000 in This IRS Rental Properties Audit

The thought of an IRS audit is a worry—no question about it. But it’s worse when the IRS wants a lot of your money. And it’s even worse yet when the IRS wants your money because it interprets the law incorrectly and, at the time you see the IRS adjustment, you have no idea whether the IRS is right or wrong.

Can Home-Office Tax Deductions Include Garage Space?

Do you claim a home-office deduction? Do you have a garage (attached or detached) at your home? If so, you need to spend a few minutes with this article. You will learn when to include and exclude the garage when calculating your home-office space.

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.

Tax Rules That Allow Tax Deductions for Your Yacht

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

14 Tax Reduction Strategies for the Self-Employed

Inside this article, you’ll find the 14 tax reduction strategies for the self-employed that we identified for you last month. But here you find more—links to the articles so that you have the nuts and bolts of implementing the strategies.

How the Law Decides If Your Travel Day Is Personal or Business

If you travel out of town overnight on business, you need knowledge of the tax rules that allow and disallow such travel. This article clarifies the days that tax law deems to be business and the days that tax law deems to be personal.