Archive October, 2013
The Nanny Tax - From time to time, the "nanny tax"
breaks into the news after an unfortunate Presidential appointment. Remember "Nannygate"
from a few years back? You might think that, unless you are being appointed to
the President's cabinet, the "nanny tax" isn't something you need to worry
Paying the IRS With An Installment
Agreement - Have you ever discovered that you owe more taxes than you had
anticipated? Taxpayers who cannot pay the full tax due may set up an installment
payment plan with the IRS.
Like-Kind Exchange Rules - If you plan to dispose of some business or
investment property that has appreciated value in the near future, you may want
to consider the opportunity to "postpone" the tax on your capital gain by
exchanging it for "like-kind" property.
Reducing Your Property Tax Bill -Many real
estate tax assessments are made erroneously or were made prior to the recent
decline in real estate values, and many homeowners and business owners who
challenge their real estate tax assessments do succeed in reducing their
Costs - As CPAs and business consultants, we get approached every day it
seems by a client or potential client with a new business idea they are
investigating. As we all know, some of those ideas work out and become viable
enterprises and some never get off the ground.
Tax Benefits of Home Ownership - Your home
may well be the best tax shelter you could possibly own. In addition to current
income tax savings while you own your home, any gain you realize as the result
of an increase in the value of your home will most likely be excluded from
Employee Tax Issues - In
reviewing our newsletter articles over the past year or so, we realized that the
vast majority of them are focused on business owners and the
self-employed. However, we also have quite a few clients who earn most of their
income as employees and this article is geared toward assisting you in
understanding and taking advantage of the tax saving opportunities available to
Is Your Sideline Business Really A
Hobby? - That is a serious question for many individuals who are
moonlighting from their "day job" with a sideline business. We have all heard
the stories over the years of people deducting 20 straight years of losses on
their horse farm business, but what about the guy who races stock cars or buys
and sells rare coins?
Deducting Vehicle Expenses - If you use your car
or truck for business-related trips, to deliver food to your favorite charity,
or even to drive the kids to the doctor’s office, you can deduct at least some
of the costs.
IRA FAQs - There are a number of
rules and regulations surrounding IRA investments, and the amount of information
can often be overwhelming. This list of questions and answers has been assembled
to make it easier to find the answers you are looking for.
Business Startup Costs - As CPAs and
business consultants, we get approached every day it seems by a client or
potential client with a new business idea they are investigating. As we all
know, some of those ideas work out and become viable enterprises and some never
get off the ground.
Avoiding An Audit - Uh oh! What starts out as a
normal day suddenly becomes dark and foreboding when you open your mailbox and
receive a special invitation from your friends at the local IRS office.
Investment Interest - Many of our clients
are often confused when the subject of "deductible" interest is brought up. Many
years ago, all interest (yes, for you younger readers, even credit card and auto
loan interest) was available as an itemized deduction on your personal return.
Business Owner's Insurance - Like
a comprehensive homeowner's policy, a business owner's policy protects against
economic losses caused by damage to the owner's property and by legal liability
to others for bodily injury and property damage involving the business.
Records - Each year as we deliver our clients' tax return copies and filing
information to them, we inevitably get asked the age-old question: "How long do
I need to keep this stuff?"
Overwithholding - Although it is now getting late in the year, we are going
to address one of the chief frustrations of many CPA's - over-withholding by our
clients. We've heard your reasoning. You don't have the discipline to save money
yourself, so you have Uncle Sam save it for you.
Nonqualified Pension Plans - Due to the
exploding popularity of tax-deferred 401K plans over the last decade,
congress has increasingly made them the target of new rules and limits aimed at
stemming the tide of lost revenue the federal government has experienced.
Deferred Contributions - As baby boomers move toward retirement years and
begin inheriting the accumulated wealth of their parents, we are seeing more and
more charities approach our clients about "deferred giving." A deferred or
"planned" gift represents a present commitment to make a gift at some point in
the future - usually at a later stage in life or pursuant to your will.
Filing A Tax Extension - Well, we can probably
assume that if you have come to this link in our website, it must be nearly the
17th of April and you probably aren't going to make it, huh? Fortunately for
you, Uncle Sam has provided for that "larger than we like to admit"
procrastinating segment of our society.
Choosing The Right Retirement Plan - As
the baby boom generation heads into retirement and the worries over Social
Security begin to mount ever higher, many small businesses are finding it
difficult to recruit educated employees without offering some type of retirement
Loans or Dividends - Making loans to or taking a loan from a corporation
where you're a stockholder can lead to tax trouble. In one highly referenced
legal case from the 1990s, the taxpayer 'borrowed' money from his regular
Business Ownership of Autos
- Most businesses use a car to some extent. Should your business purchase a car
for your use? For your employees? There are a number of factors to consider and,
while there are some guidelines, the final decision is an individual one.
Contract Employees - Your company has just
won a major contract and you are anticipating the need for some short term
employees to get you through the crunch period. Since these employees can work
out of their home and set their own hours, you decide to pay them as contract
laborers instead of placing them on the payroll.
Sales Tax Audits - If your company has not
had the unpleasurable experience of a state sales tax audit within the last two
or three years, it may be time to batten down the hatches! Across the nation,
state sales tax audits have increased significantly over the last few years and
that trend is likely to accelerate. The reason is simple - sales tax audits are
proven revenue generators for the cash-starved states.
Renting Out Your Second Home -If you have a
second home or vacation home that you would like to rent out for part of the
year, it can actually be an excellent way to earn additional income and get a
nice tax break at the same time. There are rules you need to follow (as always)
and we'll address some of those in this article.
Buy / Sell Agreements - Many small business
owners often ignore the critical importance of a well-designed and updated
buy-sell agreement. In the event of a buyout or death, a properly written
buy-sell document can address major issues such as payment terms, funding and
Understanding Your Credit Report - Almost
everyone has faced it. You go into a lending agency to buy a new car or purchase
a home only to have questions arise about items on your credit report. It has
become much more common now since the recent credit crisis.
Knowing The Rules On Charitable Deductions
- Contributions made to qualified charitable organizations are eligible for tax
deduction. Qualified organizations include nonprofit groups qualified by the IRS
as religious, charitable, educational, scientific, or literary in purpose, or
that work to prevent cruelty to children or animals.
Placing Your Spouse On The Payroll - If you
own a small business and have a spouse who does not have full-time employment
elsewhere, you may want to consider placing him or her on your company payroll.
(Keep in mind that your spouse must do legitimate work for the company and the
compensation for that work can be challenged by the IRS if it is considered
Acquiring A Business - Whenever one our
clients is looking to sell his or her corporation, we often encourage them to
seek a stock transaction with the potential buyer if at all possible. On the
other hand, when we have a client considering the purchase of a small business,
we almost always advise that they buy only the assets of the company and not the
Getting Your Records Organized
- Now that we have come upon another tax season (that noise you hear in the
background is the sound of our staff sighing), we typically spend the first few
days getting our office organized for the oncoming rush. Getting organized is
also good advice for most of our clients as well.
Commonly Missed Tax Deductions - It is once
again time to begin consolidating and preparing your records for your annual tax
filing so in order to assist you, we have put together a list of deductions you
may want to review first. Expert reviews of returns filed in past years reveal
that many taxpayers commonly miss out on deductions they were entitled to.
Your Home - With the end of the year approaching, many people begin making
their new year's resolutions for the following year and one of the most common
major goals for a new year is to change their job or their home (or both!).
Life Insurance In Your Estate - If
you're like most people, the proceeds collected from your life insurance will
make up a large portion of your estate and, if you're not careful, the proceeds
can end up being taxed twice when your spouse passes on.
Selling To A Related
Party - Over the years, we have had the difficult task of
bringing many clients down to earth after they had "developed" the perfect plan
to rid themselves of a piece of property by selling it at a loss to a relative
and thereby gaining a tax deduction. It certainly sounds like a grand plan.
There is, however one small catch - Code Sec. 267 specifically disallows losses
on sales to related parties.