2019 Tax Insights

Last Minute Tax Planning for Existing Vehicles

Yes, December 31 is just around the corner.  That’s your last day to find tax deductions available from your existing business and personal (yes, personal) vehicles that you can use to cut your 2019 taxes. But don’t wait. Get on this now!  Take Your ... (continued)

Know These Divorce Rules if Self Employed

As with all financial transactions, divorce comes with tax consequences. And those consequences have changed for tax years 2018 and later thanks to the Tax Cuts and Jobs Act (TCJA).  General Rule  The general tax rule in a divorce is that you can divide up ... (continued)

No 1099 Issued–No deduction IRS Says–Read On!

Imagine this: you didn’t issue Form 1099s to your contractors.  Now, the IRS is auditing your tax return, and the auditor claims you lose your deductions because you didn’t issue the Form 1099s. Is this correct?  No. IRS auditors often make this claim, but they ... (continued)

IRS Issued New Cryptocurrency Tax Guidance - Here It is!

The IRS recently issued new cryptocurrency guidance and is hot on your trail if you bought and sold cryptocurrency and didn’t report it on your tax return. Here are the tax basics. You’ll treat cryptocurrency as property for tax purposes: If you receive bitcoin in exchange ... (continued)

Vehicle Titled in Your Personal Name-Here’s How to Structure CORPORATE Deduction

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.  Taxpayers Who Did This  The ... (continued)

Year End New Vehicle Purchase? Tax Implications!

Here’s an easy question: Do you need more 2019 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 (needing more deductions) and the second problem (needing ... (continued)

New Individual Coverage HRA has Much to Offer to Small Business

The new individual coverage HRA (ICHRA) has much to offer a small business (businesses with fewer than 50 employees).  In this client letter, we give you nine insights into the new ICHRA.  Insight 1. Application of the Class Size Rule  The class size requirement applies only ... (continued)

Retirement Plan + Medical Year End Tax Strategies

When you get busy with your business, it’s easy to forget about your retirement accounts and medical coverages and plans.  But year-end is approaching, and now’s the time to take action.  Here are the six strategies that you can implement before the end of the ... (continued)

Year End Tax Strategies for Your Business

The purpose of this letter is to get the IRS to owe you money.  Of course, the IRS is not likely to cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you ... (continued)

Here’s How To Help Your Employees with Their Healthcare Costs

The new Individual Coverage HRA (ICHRA) lets you help employees with their health care costs without fear of ACA penalties. Starting January 1, 2020, employers can offer a new type of HRA called the Individual Coverage HRA, or ICHRA. The ICHRA allows you to reimburse (free of ... (continued)

Does A Cash Overdraft Nullify Your Tax Deductions?

Here’s a recent story of a taxpayer that I think you will find of interest.  I have a cash-basis calendar-year client who on December 31, 2018, wrote and mailed $5,000 in checks for 2018 expenses. With this activity, his books showed a $9,000 negative ... (continued)

IRS Business Mileage Rules You Need to Know

The IRS gives you two possible strategies for turning otherwise personal mileage into business mileage:  Going to a temporary work location Establishing an office in the home as a principal office The temporary work location strategy contains some real unknowns, such as:  What is a temporary work ... (continued)

2 Car Deduction Strategy

Do you have two or more cars in your household?  If your circumstances are right, we might find a hefty increase in deductions for you with the two-car strategy.  If this strategy works for you, you don’t have to drive one mile farther. You don’t ... (continued)

Lethal Combination-Heavy Vehicle & Home Office

You can reap major tax savings with the heavy vehicle and home-office combo.  The heavy vehicle produces quick deductions. The home office that qualifies as a principal office eliminates commuting miles, and such an elimination can dramatically increase your business-use percentage of vehicles.  For example, ... (continued)

Reasonable Business Miles-You Probably Do Not Know This

The tax law contains no reasonableness test for mileage In fact, tax code Section 274 specifically discards the reasonableness standard and puts in its place strict substantiation rules.  We recommend that you keep a mileage log for at least three consecutive months to prove your ... (continued)

Corporate Reimbursed Expenses-These Rules MUST be Followed

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.  Taxpayers Who Did ... (continued)

Bonus Depreciation on a Leased Vehicle? Yes!!

Before the Tax Cuts and Jobs Act (TCJA), your purchase of the vehicle you were leasing did not qualify for either Section 179 expensing or bonus depreciation.  But times have changed.  The TCJA made two changes that mean 100 percent bonus depreciation is available on ... (continued)

30% Residential Solar Credit-Yes if You Qualify

Here’s a heads-up.  The 30 percent residential solar credit  drops to 26 percent for tax year 2020, drops to 22 percent for tax year 2021, and terminates in 2022. Also, unlike the 30 percent commercial solar credit, where you can qualify for the 30 percent tax credit when ... (continued)

5 Strategies for Your Business Losses Under the New Tax Law

Tax reform made a lot of good changes in the tax law for the small-business owner.  But the changes to the net operating loss (NOL) deduction rules are not in the good-changes category. They are designed to hurt you and put money in the ... (continued)

Great Tax Strategy to Employ with Your Wife

Tax reform changed the rules of the game when choosing your best tax structure.  In looking over the possibilities, we note that a properly structured spousal partnership could be your best choice.  Here are the tax benefits to you:  Your spouse’s income is free from self-employment ... (continued)

Roth IRA vs Traditional IRA-Which is Better For You

Roth IRA versus traditional IRA: which is better for you?  Roth IRAs tend to get a lot of hype, and for good reason: Because you pay the taxes upfront, your eventual withdrawals (assuming you meet the age and holding-period requirements—more on these below) are ... (continued)

Check Your Beneficiary Designations-Read This Disaster Story

Check your beneficiary designations now, before disaster strikes.  With the current super-generous federal estate tax exemption of $11.4 million, estate planning may be completely off your radar.  After all, with that huge exemption, you may think there’s no way your estate would owe any federal ... (continued)

Sale Of C Corporation Stock-No Capital Gain-Yes!

Section 1202 allows you to sell a qualified small business corporation (QSBC) on a tax-free basis.  Now, add to this no-tax-on-sale benefit to the 21 percent corporate tax rate from the Tax Cuts and Jobs Act, and you have a significant tax planning opportunity.  Imagine ... (continued)

Business Meals Deductions After New Tax Law

Here’s good news for business meals: the Tax Cuts and Jobs Act (TCJA) removed the “directly related and associated with” requirements from business meals.  The net effect of this change is to subject business meals once again to the pre-1963 “ordinary and necessary” business ... (continued)

Section 179 and Death-Must Read!

What tax effect would death, retirement, or disability have on you or your business?  Here’s an easy example to illustrate.  Let’s say that in 2017, you purchased for business use a pickup truck with a gross vehicle weight rating greater than 6,000 pounds. Asserting that ... (continued)

How to Deduct Medicare Premiums

Premiums for Medicare health insurance can add up to a substantial sum. That’s especially true if  you have high income, and you’re married and both you and your spouse are paying premiums. Fortunately, the premiums can potentially help your tax situation. The dollar benefit of Medicare ... (continued)

What to do if Your K-1 Does Not Include Section 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?  You have a big problem. Without a ... (continued)

S Corporation Strategies to Save You Tax Dollars

Reduce S Corporation Owner’s Wages  As the owner of an S Corporation, you can legitimately cut payroll taxes by thousands of dollars by paying yourself a lower salary and allocating the remainder of your income as distributions. However, be sure to make your salary ... (continued)

10 Tax Saving Strategies for the Self-Employed

As a self-employed individual, you can feel overwhelmed when you search for strategies to reduce your taxes.  I searched one of our tax services and found more than 263 articles with the words “self-employed” or “self-employment.” That’s a lot.  Where do we start?  Let’s start with ... (continued)

Single Member LLC for Your Real Estate Ownership

You’ll find much beauty and little beast in using a single-member LLC for your real estate ownership.  Should you use a single-member LLC as a real estate ownership vehicle?  That might be a very good idea.  Under the so-called check-the-box regulations put out years ago by ... (continued)

Secrets To Pocketing Cash When You Rent Your Bedroom

When you rent a bedroom or two or 20, you first examine Section 280A of the tax code to determine whether your bedroom rental is:  tax-free because your rentals were for fewer than 15 days during the tax year. subject to section 280a vacation home ... (continued)

June–Client Newsletter

Combine Home Sale with the 1031 Exchange You don’t often get the opportunity to even consider making a tax-saving double play. But your personal residence combined with a desire for a rental property can provide just such an opportunity.  The tax-saving strategy is to combine ... (continued)

Odometer Readings for Your Vehicle Expense?

Do you claim your business miles at the IRS optional rate?  If so, imagine you are now being audited by the IRS for your business mileage. The IRS has requested odometer readings for your vehicle. You might wonder if the IRS can do this.  The ... (continued)

FAQ’s on Section 199A Deductions

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.  The IRS often publishes FAQs on its website to help educate you ... (continued)

Multiple Rental Properties & Section 199A Deductions

There’s a lot of confusion out there around your rental activity and Section 199A.  Your Section 199A considerations multiply when you have multiple rental activities. Here’s what you need to consider:  Are your rental activities multiple trades or businesses, or one trade or business? Can you ... (continued)

Protect Yourself—Here’s What Can happen with the Wrong Tax Preparer

Here’s a rule: Protect yourself. Do not engage dishonest tax preparers.  And here’s a story that I want you to hear.  The government indicted, tried, and convicted tax preparer Gregory D. Goosby of 30 fraud violations where he willfully aided and assisted in the preparation ... (continued)

Must Keep Records Of Home Improvements-Here’s Why!

We know that you don’t like it. But you have to accept it You are in a business and personal partnership with the government. One portion of your partnership agreement is the tax code.  And we are sure there are many parts of the tax ... (continued)

Here’s How To Avoid Penalties Under TCJA

Thanks to the Tax Cuts and Jobs Act (TCJA) tax reform, you have thousands of pages of new tax rules and not a lot of guidance on many of them.  Let’s say you want to take a certain tax-deduction position on your tax return, ... (continued)

New Tax Law Deductions for Your Vehicle

Before the Tax Cuts and Jobs Act (TCJA), your purchase of the vehicle you were leasing did not qualify for either Section 179 expensing or bonus depreciation.  But times have changed.  The TCJA made two changes that mean 100 percent bonus depreciation is available on ... (continued)

Medicare Coverage for Employee(s)-Here’s How

The Affordable Care Act’s $100-a-day penalty for improper medical reimbursements likely has your attention. And it should. But you can find many reimbursements that are allowed without penalty, including the ability to reimburse Medicare when you have fewer than 20 employees.  Some group insurance ... (continued)

Home Office Tax Benefits

If you have no taxable income, should you claim the home-office tax deduction?  Answer: yes. Even with no taxable income, you have two for-sure tax benefits from the home office, and you likely have a third benefit.  By claiming your home office as your principal ... (continued)

Client Newsletter

Tax-Saving Tips March 2019  When the Second Office in the Home Is a Principal Place of Business When possible, you want to claim that your office in your home qualifies as a principal place of business because this classification  gives you the home-office deduction, and eliminates commuting ... (continued)

Medicare as a Business Deduction-Yes!

Premiums for Medicare health insurance can add up to a substantial sum. That’s especially true if  you have high income, and you’re married and both you and your spouse are paying premiums. Fortunately, the premiums can potentially help your tax situation. The dollar benefit of Medicare ... (continued)

Loans To Your Corporation Under New Tax Law

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 ... (continued)

Employee Recreation/Entertainment Survive New Tax Laws

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 ... (continued)

Another Worthwhile Look At The Home Office Deduction

When possible, you want to claim that your office in your home qualifies as a principal place of business, because this classificatio gives you the home-office deduction, and eliminates commuting from your home to your regular office. Current law gives you two ways to claim your ... (continued)

Must Landlords Give 1099’s 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 ... (continued)

Final Regulations on Capital Gains under 199A

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.  In new final regulations, the IRS has given clarity to the capital gains component of the Section 199A tax ... (continued)

Car Lease Or Purchase-Must Read!

What’s truly totally upsetting and avoidable?  A tax surprise!  Arthur E. Boyce claimed a $28,749 Section 179 deduction for the cost of his new truck.  In walked the IRS, and it denied the Section 179 deduction because Boyce leased the truck that he thought he purchased. ... (continued)

IRS Defines Section 199A Wages

First things first.  Your Section 199A tax deduction will benefit from your business’s W-2 wages paid to you and your employees if you  are married and filing jointly and your taxable income is over $315,000 and less than $415,000; are filing as single or head of ... (continued)

Avoid the $100 -a-Day-Penalty

You may have wondered why an S corporation can pay for or reimburse a solo owner-employee’s individually purchased health insurance without worrying about the $100-a-day penalty.  The answer is that the S corporation’s payments of the solo shareholder-employee’s individual health insurance premiums are exempt ... (continued)

IRS Gives Clarity To Capital Gains Component of Section 199A Deduction

03 Feb IRS Gives Clarity To Capital Gains Component of Section 199A Deduction Posted at 14:56h Business Deductions by MF ... (continued)

IRS Gives Clarity to Section 199A For Your Business

Your ownership of a pass-through trade or business can generate a Section 199A 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, ... (continued)

Tax Reform Changes That You May Not Be Aware Of

Alimony Payments For divorce agreements executed or modified after December 31, 2018, alimony is tax-free to the recipient and no longer tax deductible for the payor. 199A Deduction Sole Proprietorships, partnerships, and S Corporations may be eligible for the new 20% deduction of qualified business income Itemized ... (continued)

Answers To Your section 199A Questions

For most small businesses and the self-employed, the 20 percent tax deduction from new tax code Section 199A is the most valuable tax deduction to come out of the Tax Cuts and Jobs Act tax reform.  The Section 199A tax deduction is complicated, and ... (continued)

New Limits on Tax Losses-Must Read!

The Tax Cuts and Jobs Act (TCJA) tax reform added an amazing limit on larger business losses that can attack you where it hurts—right in your cash flow.  And this new law works in some unusual ways that can tax you even when you ... (continued)

Tax Reform for Business Losses-Not Like Before

Tax reform made a lot of good changes in the tax law for the small-business owner.  But the changes to the net operating loss (NOL) deduction rules are not in the good-changes category. They are designed to hurt you and put money in the ... (continued)

Alert for Prepayments-Here’s How to Prepare 1099-MISC

Two questions:  Did you prepay your 2019 rent so that you have a big 2018 tax deduction? How do you identify in your accounting records the monies you put on your IRS Form 1099-MISC for the business rent payments to your landlord? For the 1099-MISC, do ... (continued)

Convert Your Personal Vehicle To Business and Get 100% Business Write-Off!

You probably like your personal vehicle just as it is.  But wouldn’t you like it far better if it were producing tax deductions? Perhaps big deductions, immediately. And the Tax Cuts and Jobs Act (TCJA) gives you the tax reform road map on how ... (continued)