2023 Tax Insights

How to Save For College Tuition

College is expensive. Data for the 2019–2020 academic year indicates that the average cost of tuition, fees, room, and board was $30,500. Tax law has provisions to help you cover the costs, including Coverdell, Section 529 savings, and Section 529 tuition plans. Contribute to ... (continued)

The Dreaded NIIT Tax & How to Avoid

NIIT Overview The NIIT is a 3.8 percent tax that applies if your modified adjusted gross income (MAGI) exceeds $200,000 (single filers), $250,000 (married, filing jointly), or $125,000 (married, filing separately). It targets the lesser of your net investment income or the amount your MAGI ... (continued)

2023 Electric Vehicle Credits

There’s good and bad news if you’re in the market for an electric or plug-in hybrid electric vehicle. The good news is that the newly enacted Inflation Reduction Act includes a wholly revamped tax credit for electric vehicles that starts in 2023 and continues ... (continued)

Need More Tax Deductions in 2023-Please Read!!

Here’s an easy question: Do you need more 2023 tax deductions? If the answer is yes, continue reading. Next easy question: Do you need a replacement business vehicle? If so, you can simultaneously solve or mitigate the first problem (needing more deductions) and the ... (continued)

The Dreaded Self-Employment Tax

If you own an unincorporated business, you likely pay at least three different federal taxes. In addition to federal income taxes, you must pay Social Security and Medicare taxes, also called the self-employment tax. Self-employment taxes are substantial! Indeed, many business owners pay more ... (continued)

More on Travel Expenses

Here’s some crucial information on how to document expenses during business travel. Corporation or proprietorship? If you operate as a corporation, the corporation should reimburse you for the travel expenses or pay for them directly. Remember, you can’t deduct employee business expenses on Form 1040 ... (continued)

A Brilliant Tax Strategy for Paying Your Children

The hire-your-child strategy works best for the Schedule C proprietorship because in this entity structure, the tax code exempts both the child and the proprietorship from payroll taxes. Corporate tax entities do not enjoy this tax benefit. However, there is a strategy to avoid payroll ... (continued)

Hiring Your Children-The Basics

You can pay your child to work in your business and get paid for paying your child. The basic mechanics of this are (a) you deduct the wages and (b) your child pays zero or very little in income taxes. The three points below ... (continued)

Solo 401K--The Maximum Tax Reduction Strategy!

Have you procrastinated about setting up a tax-advantaged retirement plan for your small business? If the answer is yes, you are not alone---This is an update from a prior Blog. You are paying income taxes that could easily be avoided. Therefore, consider setting up ... (continued)

Year-End Considerations for Existing Vehicles

Wow, how time flies! 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 2023 taxes. But don’t wait. Get on ... (continued)

Year-End Retirement Plan Considerations

The clock continues to tick. Your retirement is one year closer. You have time before December 31 to take steps that will help you fund the retirement you desire. Here are five things to consider. 1. Establish Your 2023 Retirement Plan First, a question: Do you have ... (continued)

New More 2023 Tax Deductions??

Here’s an easy question: Do you need more 2022 tax deductions? If the answer is yes, continue reading. Next easy question: Do you need a replacement business vehicle? If so, you can simultaneously solve or mitigate the first problem (needing more deductions) and the ... (continued)

Converting Personal Vehicle to Business Use-Important Details!

If you can convert a personal vehicle to business use, you likely can increase your tax benefits—and do that without spending any money or driving another business mile. Here’s an example: Once Mel and Sharpe, his wife, started using both cars, they had 73.7 ... (continued)

Travel Tax Rules You Must Know!

Say you are going to travel from your home in Washington, D.C., to San Francisco. Will the tax law allow you to travel to San Francisco by car, train, plane, or boat, your choice? Answer. Yes. But special rules apply. You need to know these rules ... (continued)

Tax Free Rental Income-Must Read!!

The Augusta rule gets its name from the Masters Golf Tournament, where some members and others who live in the area receive tax-free rent by renting their homes for a week or two. You don’t have to live in Augusta to benefit from this ... (continued)

IRS Takes Action Against Bogus ERC Claims

The IRS is on a tear against improper employee retention credit (ERC) claims. Here are four recent actions taken by the IRS: 1. Unfair Stop to Processing New ERC Claims On September 15, 2023, the IRS announced a temporary halt on processing new ERC claims until ... (continued)

HSA Revisited-May Be a Good Fit

The  Affordable Care Act (ACA) eliminated most small business health plans that reimbursed individually purchased health insurance. Consequently, many small business owners chose health savings accounts (HSAs) or opted to provide no health coverage at all. As of 2022, over 35 million HSAs were active, ... (continued)

2023 Tax Law on Meals Deductions

I hope this letter finds you well. As your tax advisor, I want to provide you with the latest updates on the business meal deduction for the year 2023 and beyond. As you may already know, there have been some significant changes to the business ... (continued)

Business Mileage Documentation Alert!

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. I recommend that you keep a mileage log for at least three consecutive months to prove your business-miles ... (continued)

Real Estate Investor vs Dealer-Huge Difference!

I have great news! You can have in your real estate portfolio both investor and dealer properties. This distinction is significant for tax purposes. Here’s a snapshot of the potential tax differences: Suppose you profit $90,000 from a property sale: As a dealer, ... (continued)

Tax Relief --A Joke

I hope this letter finds you and your loved ones safe and well. Recent natural calamities in various parts of our nation have caused considerable distress. I want to bring to your attention some crucial tax-related implications and preventive measures you may consider. IRS Tax ... (continued)

Business Meals Revisited

I hope this message finds you well. I am writing to provide valuable insights regarding the tax implications of business meals. As you may already be aware, there is a contradiction in the tax laws regarding personal living expenses, specifically personal meals and business meal ... (continued)

HSA-Why Some Business Prefer These Vehicles

When enacted, the Affordable Care Act (ACA) eliminated most small business health plans that reimbursed individually purchased health insurance. Consequently, many small business owners chose health savings accounts (HSAs) or opted to provide no health coverage at all. As of 2022, over 35 million HSAs ... (continued)

Corporate Advances to Shareholders-Must Read!!

If you operate your business as a C or an S corporation, and if you loan money to the corporation or the corporation loans money to you, you need documentation that the loan is indeed a loan. With the S corporation, the loan that fails ... (continued)

ICHRA A Potential Health Care Solution

The individual coverage health reimbursement arrangement (ICHRA) allows businesses of all sizes, from large corporations to small businesses like yours, to reimburse employees for their personally purchased health insurance expenses. The ICHRA is particularly beneficial for businesses with fewer than 50 employees because they ... (continued)

Understanding "Kiddie Tax"

I wanted to take this opportunity to touch base regarding the federal income tax rules on the “kiddie tax” and its potential impact on your financial strategy for your child(ren). In brief, the kiddie tax was enacted by Congress to prevent parents from passing investment ... (continued)

Home Office Revisited

As an owner of a corporation and an employee within that corporation, you may be eligible for a home-office deduction if: you use the office in your home for the convenience of your employer corporation, you comply ... (continued)

Here's How to Document Your Business Travel Deductions

Here’s some crucial information on how to document expenses during business travel. Corporation or proprietorship? If you operate as a corporation, the corporation should reimburse you for the travel expenses or pay for them directly. Remember, you can’t deduct employee business expenses on Form 1040 ... (continued)

Mileage Log-A Must to Sunstantiate Your Tax Deduction

I am writing today to bring to your attention a crucial aspect of business tax deductions: mileage logs. In most court cases, taxpayers lose vehicle expense deductions because they cannot present a credible business mileage log. The IRS code forbids deductions for vehicle expenses ... (continued)

Your Cleaning Lady & Tax Consequences

I wanted to offer some insights regarding an important tax aspect related to the cleaning services at your home office. As you have a home office that qualifies for a home-office deduction and you employ a cleaning lady—let’s call her Annie—who maintains both your home ... (continued)

Health Insurance for S Corporation-Update!!

I am writing to update you on the latest developments in 2023 health insurance for S corporation owners. As a more-than-2-percent S corporation owner, you are entitled to some good news when it comes to your health insurance. To ensure that your health insurance deductions ... (continued)

Estate Planning for the Rest of Us

You need an estate plan, regardless of whether or not you are among the ultra-rich. As recent news has shown, even those who have won the lottery or have substantial wealth can fall victim to poor estate planning. While federal estate taxes may not concern ... (continued)

Electric Vehicle Tax Credit Update

The IRS recently issued new guidance on electric vehicles. There are four ways you can potentially benefit from a federal tax credit for an EV you place in service in 2023 or later: Purchase an EV, and claim the ... (continued)

How to Disclose An Aggressive Tax Position

Are you considering a bold tax position that may significantly reduce your taxes? If approved by the IRS, it’s a win. But if disapproved, be prepared to face a considerable tax penalty. The IRS imposes a 20 percent penalty for substantial tax underpayment. For instance, ... (continued)

Rollover Your IRA to a Health Savings Account (HSA)-YES!!

Health Savings Accounts (HSAs) are designed for use alongside high-deductible health plans, assisting you in covering your medical expenses. They can also function as an incredible retirement account due to their triple tax benefit: You can deduct contributions from ... (continued)

Business vs Non-Business Bad Debts-Huge Tax Difference

The current economic climate makes this a good time to focus on bad debt losses. As an individual taxpayer, deducting bad debt losses has always been controversial with the IRS. To claim the deduction, you must first establish that the loss was from a bona ... (continued)

Improper Use of the $75 Day Rule

The $75 rule applies to certain business expenses where you do not need a receipt. But I emphasize that this rule does not apply to all tax deductions. Many taxpayers mistakenly apply the $75 rule to all their tax deductions, which can result in a ... (continued)

Another Potential Tax Free Benefit for Hiring Your Children

If your children work in your business, consider giving them education fringe benefits. Doing this right creates: tax deductions for the business, and tax-free fringe education benefits for the child. You can accomplish this without ... (continued)

What are NFT's & Tax Consequesnces

Did you buy, sell, donate, or receive an NFT during the tax year? If so, you must answer “yes” to the digital assets question on page one of the IRS Form 1040. Additionally, if you have sold an NFT, you could be liable for ... (continued)

Early Withdrawal on Retirement Plan Updates!!

In late 2022, Congress passed the SECURE 2.0 Act, which made several changes to tax-advantaged retirement plans. Many of the changes create new exceptions to the 10 percent penalty on early withrawals from IRAs and other retirement accounts before age 59 1/2. Starting in 2024, ... (continued)

Health Insurance for S Corporation-Update!!

I’m reaching out to remind you of two important issues related to health insurance deductions for S corporations. First, if you own more than 2 percent of an S corporation and provide health insurance coverage, there are three steps you need to follow to ... (continued)

S Corporation Health Insurance Update

I am writing to update you on the latest developments in 2023 health insurance for S corporation owners. As a more-than-2-percent S corporation owner, you are entitled to some good news when it comes to your health insurance. To ensure that your health insurance deductions ... (continued)

Rental Income Subject to SE Tax???

Do you owe self-employment tax on Airbnb rental income? That’s a good question. In Chief Counsel Advice (CCA) 202151005, the IRS opined on this issue. But before we get to what the IRS said, understand that the CCA’s conclusions cannot be cited as precedent or authority ... (continued)