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Recent Feature Headlines


May 2017

Are Tax Return Preparer Penalties Increasing Your Taxes?

How does tax law make your tax preparer part of the IRS tax compliance workforce, and what does that mean for your tax return? First, you should and can put yourself in a position to help your tax preparer avoid tax preparer penalties. For example, if your tax preparer is dubious about a deduction you want to claim, provide your preparer with the proof that the deduction is valid.


Create Tax-Free Fringe Benefit Deductions for Your Smartphone

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


Are You Cheating Yourself by Using IRS Mileage Rates?

If you qualify to use IRS mileage rates to deduct your vehicle, you need to know if you are cheating yourself with the method you select. The good news is, this article includes a tool that will give the one best method for your deduction and also tell you how much after-tax cash you pocket with that method.


Q&A: Where Do I Find an Accountable Plan Template?

 


Six Tax-Deduction Concerns about Renting My Home to My S Corporation

Last month we explained how an S corporation could rent the sole shareholder’s personal residence for 14 days or less, obtain a tax deduction for rent, and create tax-free income for the shareholder. An enrolled agent raises six issues that he thinks could negate this free-rent strategy. Learn what the issues are and why the strategy really does work.


Child’s College: Use a 529 Plan or Tap Your Roth IRA?

Conventional wisdom says that it’s best to (1) fund your retirement before your child’s college, and (2) use your retirement savings for your retirement and not your child’s college expenses. But conventional wisdom is like a general tax rule. There are exceptions.


Q&A: 1120S Line Item for Corporate Reimbursement of Home Office

 


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

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


Buying a Business: Tax Benefits from Including Debt in Your Corporation’s Capital Structure

When you are looking to buy a business and then operate that business as a C corporation, you should consider the tax benefits you can realize by creating debt as part of the corporate capital structure. If you do this, you need to put the debt in place so that the IRS will respect the debt as debt and not treat it as equity.




April 2017

Does the IRS Mileage Rate Cost You Deductions on a Leased Vehicle?

Are you going to lease your next business vehicle? Are you eligible to use IRS mileage rates? If so, both the IRS and the leasing company are going to give you rules to ponder and expenses to consider before you select your tax-deduction method—either the IRS mileage rate or the actual expense method.


Tax-Free Income from Rental of Home to C or S Corporation

Do you operate your business as an S or C corporation? If so, have you considered renting your home to your corporation for corporate meetings and perhaps the annual holiday party for employees? You should. Why? If you do the rental right, the corporation deducts the rent, and you receive the rental income tax-free.


Q&A: How the 105-HRA Creates New After-Tax Cash from Health Insurance

 


Avoid Lost Deductions When Corp. Vehicle Is in Your Personal Name

Do you operate your business as a corporation but own the vehicle you use for the corporate business in your personal name? If so, to avoid losing your rightful deductions, you need to have the corporation reimburse you for business use. The corporation can use one of two methods for the reimbursement.


Lock in the Home-Office Deduction for Your S Corporation

The home-office tax deduction provides tax savings to business owners. It turns otherwise nondeductible personal expenses into valuable business deductions. When tax law taxes your business as a proprietorship, you simply deduct home-office expenses on Schedule C. But when you operate your business as a corporation, you face special rules to achieve the same benefits.


Turbocharge Your Retirement Savings with an HSA

Looking for that extra boost to your retirement savings? Your first thought may have been to contribute to a traditional IRA. But before you do that, we have something else to show you. Consider a health savings account (HSA). That’s right. An HSA can be more than just funds you set aside to cover those copays. This is one surprisingly powerful savings tool that provides a much-needed boost to your retirement savings. See why an HSA provides some big benefits you won’t get with a traditional IRA.


Q&A: Does My Home-Office Deduction Include My Garage?

 


Minimize Your Tax Bill on Lawsuit Awards and Settlements

In many cases, the government hits your lawsuit award or settlement with the double whammy of (1) a tax bill on the gross dollar amount of the award or settlement and (2) a reduction to or even elimination of your legal fees tax deduction. But in some cases the legal fees you paid can become turbocharged tax deductions, saving you thousands of dollars in taxes. We’ll show you when you can qualify for the better deductions and how to claim them.


How to Buy a Target’s Stock and Treat the Deal as an Asset Purchase

When you can buy the target’s stock and treat the deal as an asset purchase, you have a real possibility of bringing tax-benefit smiles to both you and the seller. So if you are buying a business, make sure you know when the tax rules allow you to buy the stock of the target and treat that stock purchase as the purchase of the target’s assets.




March 2017

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

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


Q&A: Qualified Small-Employer HRA (QSEHRA)

 


Secret Cash Inside the IRS Standard Mileage Rate

Mileage-rate addicts usually think that the mileage rate takes care of everything—then they cost themselves money by failing to deduct a loss on the sale of a business vehicle.


Don’t Defeat Your S Corporation by Paying Yourself on a 1099

Do you pay yourself on a 1099 for the work you do in your S corporation? Why wouldn’t you, right? It makes life so simple. No payroll taxes to deal with, no withholding deposits, and no payroll services to pay for. Stop right there! Your simple life is about to get very complicated unless you make a change right now.


Q&A: S Corporation Owner’s W-2, Box 12 for Health Insurance?

 


Create a Business Partnership Tax-Free

You’ve decided to create a partnership for a new or existing business. Good news: forming a business partnership is usually tax-free. But you must meet the basic requirements for a tax-free formation, and you need to avoid the situations that cause you to owe taxes on the transfer of property.


Self-Rental Trap Still Costing Business Owners Tax Dollars

Business owners continue to get caught in the complex rules of the self-rental trap. A recent case taken from the Tax Court to the Fifth Circuit shows how business owners can get into tax trouble with self-rentals. But with proper tax planning and possible use of special rules called “grouping,” you can minimize and even eliminate the tax cost of the self-rental trap.


Tax-Free Injury Awards and Settlements

If you receive an award or settlement due to an injury claim, the law allows you to exclude some or all of the money you receive from taxation. You can use this exclusion along with other tax reduction strategies to minimize any tax you must pay on the amount you receive.


Tax Secrets of Buying a Business That Owns Intangible Assets

When you buy a business, you have much to consider. As you learned in prior articles, you need to consider the type of entity that owns the business and the type of entity you will use to operate the business. On top of that, every asset of the business you are going to buy impacts your tax results. In this article, you see how this all comes together and what you need to do to get the best results.




February 2017

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

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


Q&A: Can You Still Depreciate Antiques as Business Assets?

 


Dangerous Waters of Inherited Non-Spousal IRAs—Navigate Carefully

Special rules apply to inherited traditional IRAs. In this article, we look at non-spousal IRA inheritances that have their own sets of special rules. For the most part, you will like the rules. And in setting up your IRA for your beneficiaries, you should consider the stretch strategy.


Incorporate Your Business Tax-Free? Avoid Three Problems

You’ve decided to incorporate a new or existing business. Good news: incorporating a business is usually tax-free. But to make this work when traveling this road, you must meet the requirements for a tax-free incorporation and avoid the situations that cause taxes.


Q&A: Switch from Mileage Rate to Actual Expense Method

 


Special Needs Education Can Qualify as a Business Expense—Here’s How

Sending a child to a special needs school can be an onerous financial burden, with some tuitions reaching even $100,000 per year. Tax law lets you deduct tuition and other related costs as medical expenses, but you need to know which expenses qualify and how you should deduct them. This article shows you not only how to qualify but also a possible best way to maximize those deductions.


Choosing the Right Entity for a Newly Acquired Business (Part 3)

When setting up your new or acquired business, you and your co-owners should consider the multi-member LLC, another form of LLC, or the straight-up partnership. This is the last article in our three-part series on the “choices of entity” for a newly acquired business. Make sure to consider the options in this article if you are acquiring or starting a business with more than one owner.


Q&A: Tax Refunds on Unfiled Tax Returns

 


Enlist the Taxpayer Advocate to Help You Alleviate Tax Problems

You might have a friend in the government you don’t know yet. The Taxpayer Advocate Service is an independent office within the IRS that helps taxpayers solve IRS problems that they can’t seem to resolve through normal channels. In some circumstances, the advocate office can force the IRS to give you relief.