Tax Tips
Congress Closes the PayPal 1099-K Reporting Loophole
The PayPal loophole is going away in a little over six months from now. In Practice You used to be able to avoid giving 1099s to contractors and vendors when you use PayPal or a similar service as your payment platform. This pushed the reporting requirements...
IRS Focuses on Cryptocurrency
Cryptocurrencies have gone mainstream. For example, you can use bitcoin to buy far more than you would think. To see, try googling “What can I buy with bitcoin?” You will get more than 350,000 hits. But using cryptocurrencies has federal income tax implications that...
Tax Planning for the New $142,800 Base for Self-Employment Taxes
What happens when lawmakers enact a new tax? It starts small. It looks easy. In 1935, the self-employment tax topped out at $60. Those 1935 lawmakers must be twirling in their graves with the new rules for 2021, which levy the following taxes: • A self-employment tax...
Helicopter View of Meals and Entertainment (2021-2022)
Have you missed partying and having business meals with your prospects, customers, and employees? Well, get ready to start again. Soon, COVID-19 will behind us. It could be just a few short months away. To help you get ready, check the table below for what you can do...
Deduct 100 Percent of Your Employee Recreation and Parties
When you know the rules, you can party with your employees and deduct 100 percent of the cost. The IRS says that the following types of entertainment qualify for the 100 percent employee entertainment tax deduction: • Holiday parties, annual picnics, and summer...
Deduct 100 Percent of Your Business Meals under New Rules
Since 1986, lawmakers have limited business meal deductions: first to 80 percent, and then to 50 percent (unless an exception applies). But on December 27, 2020, in an effort to help the restaurant industry due to the COVID-19 pandemic, lawmakers enacted a new,...
ARPA Adds Cash to the Child Tax Credit (2021 Only)
For the 2021 tax year only, the American Rescue Plan Act of 2021 (ARPA) makes big, taxpayer-friendly changes to the federal income tax child tax credit (CTC). Here’s what you need to know, starting with some necessary background information. CTC Basics For...
Multiply Your Net Worth with a SEP IRA or Solo 401(k)
How do you multiply your net worth? Let the government help with SEP IRA and the solo 401(k) retirement plans. First Things First Here’s how: with both the SEP IRA and the solo 401(k) retirement plans, your investment in your tax-favored retirement • creates tax...
Four Things to Know When Hiring Your Spouse
If you own your own business and operate as a proprietorship or partnership (wherein your spouse is not a partner), one of the smartest tax moves you can make is hiring your spouse to work as your employee. But the tax savings may be a mirage if you don’t pay your...
Tax-Smart College Savings Strategies for Parents
College is expensive. Data for the 2019–2020 academic year indicates that the average cost of tuition, fees, room, and board was $30,500. The tax law has provisions to help you cover the costs, including Coverdell accounts, Section 529 savings plans, and Section 529...
2020 Last-Minute Section 199A Tax Reduction Strategies
Remember to consider your Section 199A deduction in your year-end tax planning. If you don’t, you could end up with a big fat $0 for your deduction amount. We’ll review three year-end moves that (a) reduce your income taxes and (b) boost your Section 199A deduction at...
2020 Last-Minute Year-End Medical Plan Strategies
All small-business owners with one to 49 employees should have a medical plan in their business. Sure, the tax law does not require you to have a plan, but you should. Most of the tax rules that apply to medical plans are straightforward when you have fewer than 50...
2020 Last-Minute Year-End Tax Strategies for Your Stock Portfolio
When you take advantage of the tax code’s offset game, your stock market portfolio can represent a little gold mine of opportunities to reduce your 2020 income taxes. The tax code contains the basic rules for this game, and once you know the rules, you can apply the...
2020 Last-Minute Year-End General Business Income Tax Deductions
Your goal should be 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 pay less in taxes. Here are seven powerful business...
The Latest on Payroll Tax Deferral
If you have employees, you must withhold their 6.2 percent share of the Social Security tax from their wages up to an annual wage ceiling ($137,700 for 2020). You must pay the money to the IRS along with your matching 6.2 percent employer share of the tax. But under...
Using Whole or Partial Rooms for Your Home Office
With the COVID-19 pandemic still going on, you may be spending more time working from your home office. You may have taken some extra rooms for your business use. Is that okay? Section 280A(c) states that you may claim a home office based on the portion of the...
Don’t Let the IRS Set Your S Corporation Salary
You likely formed an S corporation to save on self-employment taxes. If so, is your S corporation salary nonexistent? too low? too high? just right? Getting the S corporation salary right is important. First, if it’s too low and you get caught by the IRS, you will pay...
Getting Around the New Law That Impairs the Stretch IRA Strategy
Last December, the Setting Every Community Up for Retirement Enhancement (SECURE) Act became law. The SECURE Act was intended mainly to expand opportunities for individuals to increase their retirement savings and to simplify the administration of retirement plans....
Don’t Let Section 179 Recapture Hurt You
Okay, so you took the big Section 179 expensing deduction on your vehicle. How do you keep it? You might wonder: What do we mean by “keep it”? In tax law, there’s no free lunch. The Section 179 deduction comes with “recapture strings” attached. When you claim your...
Best Choice: De Minimis or 179 Expensing—or Bonus Depreciation?
How do you avoid losing money by making the wrong choice? You may not have considered the choices you have for deducting the assets that you buy for your business. Example To create some perspective, let’s say you have seven employees who now work at least two...