Tax Tips
New Reasons for Accountable Plan Reimbursements
Failure to use an accountable plan for your employee expense reimbursements (including yourself if you operate as a corporation) turns those improperly reimbursed expenses into taxable wages. In other words, by failing to comply with the accountable plan rules, you...
Personal Use of Your Rental Triggers Ugly Vacation Home Rules
You must consider the vacation home rules when you rent a bedroom in your home and also use it personally, or rent your beach home (or any other home you own) and also use it personally. Personal Use of the Dwelling Rent or use by relatives. Personal use...
Blueprint for Employee-Spouse 105-HRA (Health Reimbursement Arrangement)
The Affordable Care Act (ACA) does not apply to a business that has only one employee. This opens the door (likely regardless of what lawmakers do with the ACA) for what we are going to call the 105-HRA. We created this name from its two predecessors: 1. The Section...
How Corporations Reduce IRS Audits of Home-Office Deductions
You have probably read that the home-office deduction increases your chances of IRS audit. We’ve read that, too, but we don’t believe it. Regardless, there are a few things you can do to make your home office less likely to ever appear in an audit. If you filed your...
Year-End Tax Deductions for Existing Vehicles
It’s time to examine your existing cars, SUVs, trucks, and vans for some profitable year-end business tax deductions. Your first step is to identify your gain or loss on sale. Once you have the gain or loss, know these basic rules: • Gains attributable to depreciation...
Beware: Conflicting IRS Rules for Deducting Your Business Gym—Don’t Use the Wrong Ones
I know that you have been thinking about employee fitness and the possibility of a gym or other athletic facility. To be tax deductible, your gym or other athletic facility must be primarily for the benefit of your employees—other than employees who are officers,...
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 estate tax if you happen to...
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 completely tax-free. While we like “tax-free” as much as the next...
Business Meal Tax Deductions After the Tax Reform
Here’s good news for business meals: the Tax Reform 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 expense...
Impact of Death, Retirement, and Disability on the 179 Deduction
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...
Proven Tax Reduction Strategies for Sole Proprietors
If you operate your business as a sole proprietorship, there are many strategies to reduce your taxes. Let’s start with the following 10: 1. Use the Section 105 plan to make your health insurance a tax-favored business deduction on your Schedule C. 2. Employ...
Avoid This S Corporation Health Insurance Deduction Mistake
If you own more than 2 percent of an S corporation, you have to do three things to claim a deduction for your health insurance. Three things you must do 1. You must get the cost of the insurance on the S corporation’s books. 2. Your S corporation must include...
Incorporation Is Not for Everyone
If you’re not good at paperwork, the corporate form of business is probably not for you. Let me tell you about a tax court case involving William H. Bruecher III. He learned a lesson by paying more than $27,000 in taxes on monies his corporation supposedly loaned to...
How to Deduct Cruise Ship Conventions, Seminars, and Meetings
If you want to attend a convention, seminar, or similar meeting onboard a cruise ship and deduct all your costs, you face some very special rules. But it can be done. When you know the tax code rules, you will find an enlightened workaround that removes almost all the...
Can the IRS Require Odometer Readings with the Mileage Rate?
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 Law The answer is...
Tax Reform Puts Screws to Hobbies
The tax law has mistreated hobbies for a long time. But the most recent tax reform brings the grim reaper to the party, and it’s not pleasant. This means you need to focus on making your activity a business and not a hobby. The Law Under both prior law and the...
Buy Your Employees (and Yourself) Flowers and Fruit, and Deduct the Cost
Under the de minimis fringe benefit rules, your business deducts the cost of giving you or your employees flowers, fruit, books, and similar property under special circumstances. The recipients—you or your employees—receive these fringe benefits tax-free. You can’t do...
Know These Tax Rules If Your Average Rental Is Seven Days or Less
If you own a condominium, cottage, cabin, lake or beach home, ski lodge, or similar property that you rent for an “average” rental period of seven days or less for the year, you have a property with unique tax attributes. Seven days example Say you have a beach...
How to Handle Multiple Rental Activities and the 20% Deduction
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 aggregate the rentals for Section 199A purposes? Do you want to?• How does the Section 199A...
QBI Issue When Your S Corp Is a Partner in a Partnership
The tax-saving strategy of S-corporation as a partner does affect your Section 199A deduction. Guaranteed payments are not qualified business income (QBI) for the Section 199A deduction. The non-QBI guaranteed payment rule applies whether the partner receives the...