Tax reform changed the rules of the game when choosing your best tax structure. In looking over the possibilities, 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 tax. You and your spouse both still qualify for the new pass-through…
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Reduce Your Taxes by Making Your Spouse a Business Partner
Tax Reform Expands Your Section 179 Deduction Privilege
The new and improved Section 179 deduction gives you more ways to take advantage of immediate tax deductions. It’s somewhat like having a flexible tax shelter in your back pocket for when you need it (and also need the property, of course). As in years past, the Section 179 deduction is available for both new…
Tax Reform Destroyed State and Local Tax Deductions—Fight Back
Tax reform put the screws to your state and local income tax deductions, capping them at $10,000. Many states disliked that and have been putting together workarounds. But now the IRS is creating regulations to put the kibosh on your state’s creative plans. Unless federal lawmakers change their minds, your federal deductions for state income…
Tax Planning for Snowbirds
You can plan your tax-deductible business life to avoid cold winters and hot summers. Spend a moment examining the following four short paragraphs that contain the basic facts from the Andrews case. For six months of the year, from May through October, Edward Andrews lived in Lynnfield, Massachusetts, where he owned and operated Andrews Gunite…
IRS Rules for Deducting Your Business Gym
If you have been thinking about the fitness of your employees and the possibility of a gym or other athletic facility, then you need to know the tax rules. 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, shareholders, or…
Hiring Your Children to Work on Your Rental Properties
Have you considered hiring your children to work on your rental properties? If so, were you concerned when you did not see a line item for wages on Schedule E of your Form 1040? Don’t let that bother you. The IRS in its instructions explains that wages and other ordinary and necessary business expenses of…
Your Personal Home Is Not Your Tax Home
The fact that your personal home is not your tax home is one income tax issue. Here’s another: Business travel is different from business transportation. Your tax deductions, tax strategies, and tax records hinge on the following federal income tax–defined terms: Personal home Tax home Business travel Business transportation We know you don’t have an…
Reduce Self-Employment Taxes by Renting from Your Spouse
As a sole proprietor, you know that the 15.3 percent self-employment tax can eat up your profits in a hurry. You may be able to use a simple strategy to ease this tax burden. If you own an office building or other assets, you can set up a rental arrangement with your spouse that could…
How to Deduct Your Legal Fees after Tax Reform
The Tax Cuts and Jobs Act (TCJA), known as tax reform, made it more difficult for you to deduct your legal fees. The new tax reform law suspended (killed is a better word) your legal fees as 2 percent miscellaneous itemized deductions for tax years 2018 through 2025. This means you need to look for…
Tax Reform: Planning for Your New 20 Percent Deduction
As you likely know by now, the Tax Cuts and Jobs Act created a 20 percent tax deduction under new tax code Section 199A. The question for you: Will you reap any benefits from this new deduction? And the second question: If your chance of qualifying for the 20 percent tax deduction looks bleak, what…
Avoid Being an IRS Target When Your Business Loses Money
If you operate what you think is a business, but that business loses money, it may not be a business at all under the tax code. Such a money-losing activity can look like a tax shelter to the IRS, and that substantially increases your chances of an IRS audit. The tax code contains a business…
Divorce? Alimony? Tax Reform Says Get Divorced Now—Don’t Wait
Tax reform changes the alimony game. This may or may not have any relevance to you, but if it does, you will want to move quickly. The Tax Cuts and Jobs Act (TCJA) eliminates tax deductions for alimony payments that are required under post-2018 divorce agreements. More specifically, the TCJA’s new denial of alimony tax…
Tax Reform Update on Business Meals with Clients and Prospects
Note that in our previous announcements, we let you know that business meals with clients and prospects were no longer deductible based on the recent tax reform changes. But we now know that lawmakers plan to reinstate business meals with clients and prospects as 50% deductible. Here’s the updated strategy: deduct your client and business…
S Corporation Fringe Benefits after the Recent Tax Reform
Fringe benefits are usually a good thing—but there’s a catch when you own more than 2 percent of an S corporation. The good news? Federal tax law allows the cost of these fringes as deductible expenses for your S corporation. The bad news? You, the shareholder-employee who owns more than 2 percent, may suffer additional…
Good News: Tax Reform Lands a Blow to AMT
Tax reform made changes to the tax law that significantly impact the alternative minimum tax (AMT). The changes could mean more money in your pocket and less going to the government. If you own a C corporation, then you are the big AMT winner: Tax reform completely eliminated AMT for C corporations. C corporations are…
Tax Reform Makes Professional Gamblers Who Lose Money Suffer More
As a professional gambler, you know that tax law did you no favors before tax reform. But now, because of tax reform, tax law has you between a rock and a hard place for tax years 2018 through 2025, because during this eight-year period of darkness, you get no deduction for any part of your…
Tax Reform Increases the Tax Benefits of Employing Your Child
The recent tax reform eliminated personal exemptions for taxable years after December 31, 2017, and before January 1, 2026. This makes your child worth less to you on your Form 1040. But there is a way to get even or, perhaps, much more than even. Let’s set the stage first. For taxable years after December…
Proving Travel Expenses after Tax Reform
As you likely know by now, your travel meals continue under tax reform as tax-deductible meals subject to the 50 percent cut. And tax reform did not change the rules that apply to your other travel expense deductions. One beauty of being in business for yourself is the ability to pick your travel destinations and…
Tax Reform Punishes W-2 Employees—Get Even!
The recent tax reform added new tax code Section 67(g), which states, “No miscellaneous itemized deduction shall be allowed for any taxable year beginning after December 31, 2017, and before January 1, 2026.” Let’s say you are a W-2 mortgage banker paid on a commission basis, and during 2018, you will incur $27,000 of employee…
New Court-Approved Way to Defeat IRS Penalties
You hate IRS penalties, right? Everyone does! There are a lot of strategies we can use on your behalf to potentially defeat an IRS penalty. Thanks to the courts, though, we now have a brand-new way to beat an IRS penalty. It’s Section 6751(b) of the Internal Revenue Code. This provision can get you out…