By month: June 2022
The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued proposed regulations showing how it intends to implement the Corporate Transparency Act—a law enacted in 2021 that requires smaller businesses to disclose beneficial owner information to the federal government. FinCEN plans to start enforcing the law as soon as mid-2022, and it will affect as many as 30 million new and existing smaller businesses.
All taxpayers must answer a question on Form 1040 about cryptocurrency. Unfortunately, it’s a trick question. You can engage in many types of crypto transactions without having to answer “yes” to the question. If you answered the question wrong, you don’t have to amend your return unless you failed to report crypto income.
If you own a second home and have both personal and rental use of that home, the tax code treats it as a tax-defined vacation home regardless of its location in the city or at the beach. Of course, you could use it solely or partly for business lodging and avoid the vacation home rules. With a second home, you have many tax strategies to consider.
Pay attention to the rules on what makes a business mile and what makes a personal mile, so you can achieve the best possible vehicle deductions.
The IRS rewards business owners who are proactive in fixing their worker classification mistakes using the Voluntary Classification Settlement Program (VCSP). With this program, you can correctly classify your workers at a minimal cost and without the risk of an employment tax audit.
Holding real estate in a self-directed IRA can help diversify your retirement investments, but it can come at a hefty price, including crippling prohibited transaction rules and the loss of valuable real estate tax deductions.
You may not have thought of this, but taking a cruise ship to Mexico for a business meeting is acceptable as a deductible form of transportation.
Buying real estate with a self-directed IRA may sound great, but it can be hard to get financing—and if you do finance the property, your IRA could be subject to unrelated business income taxes during its operations and at the time of sale. You also need cash reserves for operations and to pay out minimum distributions when you hit retirement age.
Making gifts to promote your business is complicated by time, inflation, and poor tax legislation. Make sure you know the rules so that you keep your tax deductions on your tax return.