How To Avoid A Big Tax Surprise In 2019

With only five months left in 2018, it is probably time you start thinking about what your income taxes will look like before the end of the year.  The 2018 Trump tax overhaul not only changed the entire tax table system, but there were serious alterations for individuals and small businesses that could throw a real knot in your income taxes if you don’t carefully plan.  The challenge for most families is that they plan reactively versus proactively often only thinking about taxing when it is time either write a check or collect a refund.  Here are my five ways to avoid a big tax surprise come March or April in 2019.   Review Your Withholdings And Do A Mock Tax Projection The IRS did an overhaul of the tax withholding tables and most people didn’t change their withholdings from Married 1 or Single 2 or wherever you had your overall withholdings. The big question you want to start with ...

Read More →

179 Reasons Business Owners Need This Tax Deduction

In the flurry of tax changes that happened for 2016, one of the most overlooked deductions by small business owners is the Section 179 tax deduction.   This deduction was set up to allow business owners to deduct many different types of equipment used for their business.  In fact, there were certain loopholes within this tax code to allow for the purchase of certain vehicles as well. The IRS has set the Section 179 tax deduction limit in 2016 for $500,000 and the overall phase out is $2 million.   There was a little known act that got enacted called PATH (Protecting Americans From Tax Hikes Act of 2015).   PATH presented business owners with a significant opportunity to purchase software, technology, and equipment and if structured correctly expense all of it off in the year they pay for it versus depreciating it down the road. One of the most frequently asked questions is when businesses lease or buy equipment is whether or ...

Read More →

When Can I Hire My Kids In The Business?

When you run a small business, you often look for almost any tax deduction that you can take off your bottom line that has a legitimacy when it comes to filing your taxes. For most business owners, there is always a blurred line between your personal life and your business life. Often, your children end up getting involved whether it comes to running errands, filing papers, or even assisting with your company Facebook page. So, the big question is when can your hire your children in the family business and how do you document this when it comes to filing your taxes? I truly believe that one of the most underutilized tax deductions for small business owners is getting their children engaged in the family business. By placing children (or even grandchildren) on the payroll who are under the age of 18, you can create a great opportunity to take advantage of something called income shifting. Your company can hire ...

Read More →

You Are A Sole Proprietor: How About A Solo 401(k)

I am seeing more and more people quit the corporate America lifestyle and venture into becoming their own business owner.  This shape of a business owner can be a freelancer, consultant, or someone who actually starts up a ‘brick and mortar’ operation.    Many of these folks will ask questions about whether they should incorporate their business, which I have discussed in other articles.    Once they become profitable, they often ask which kind of retirement plan would suit them the best.   For someone who is a sole business owner, the Solo 401(k) has been around for about a decade and provides a great alternative to helping maximize your retirement contributions.   Here’s a little history on the Solo 401(k) and how it can be a smart money move for your business. The Solo 401k came about in 2002 after Congress passed Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). EGTRRA added some small paragraphs to the tax code that put ...

Read More →

The Conservation Easement Charitable Deduction

Prof. Beckett G. Cantley* Holders of historically and environmentally significant real property often desire to maintain the property in its present state. However, undeveloped or historically preserved use is unlikely to be the most profitable land use, particularly where such land lies in a major urban area or contains valuable mining rights. Landowners with a genuine desire to preserve their land may lack the means to maintain valuable land at less than optimal use. Due to these concerns, Congress enacted Internal Revenue Code (“I.R.C.”) § 170(h)(2)(C) to provide tax deductions for taxpayers who donate an easement that is considered a “qualified conservation contribution”. The enactment of a federal income tax deduction for the donation of an easement considered to be “qualified conservation contribution” was essentially a Congressional subsidy to preserve historically and environmentally unique land in its current state, rather than developing the land to a more profitable use. In general, a “qualified conservation contribution”, has the following qualifications and ...

Read More →

What Tax Deductions Can I Take For Using My Car?

As the tax year ends and you scramble to pull together your year end tax deductions, people often ask us whether they can get  a deduction for using their automobile.  It’s important to understand these rules for both employees and business owners alike as this could mean big bucks in your pocket come tax time. According to the IRS Topic 510 business use of a car (http://www.irs.gov/taxtopics/tc510.html), you can generally figure the amount of your deductible car expense using one of two methods: the standard mileage rate method or the actual expense method. If you qualify to use both methods, before choosing a method, you may want to figure your deduction both ways to see which gives you a larger deduction. Please refer to Publication 463, Travel, Entertainment, Gift and Car Expenses, for the current standard mileage rate. If you use the standard mileage rate, you can add to your deduction any parking fees and tolls incurred for business purposes. ...

Read More →

How To Lower Your 2011 Income Taxes

The color of the trees  are changing during the beautiful fall season, and that also means it’s time to begin thinking about strategies for minimizing your 2011 income taxes before the year has come to a completion.    Remember, that when it comes to lowering income taxes, you generally have to large rock strategies.   Above the line deductions are tax deductions that reduce the amount that will end up on the taxable income line to determine how much tax you should have paid for 2011.   Below the line deductions, which mainly have to deal with tax credits that will offset the tax you owe dollar for dollar in most cases.     It is important to note that there are many strategies to keep your income taxes down, but here are four you should consider before the clock strikes midnight in 2011.  Max out your contributions to your employer sponsored retirement plan –   For most of you this will be your 401(k), 403(b), ...

Read More →

I like April 15th!

Within a few weeks, we will be approaching one of my favorite days of the year April 15th.   This is the last day of the official tax season unless you are filing an extension.   If you ever want to see something truly funny, park your car around 10 p.m. outside of a U.S. Post Office on the last day of tax season and watch the masses flock with their tax returns. The thing I like about April 15th is asking the question, “Did you learn anything different this tax year than the year before this one?” Each year, people seem to spend more time watching Dancing With The Starts or some other reality show than figuring out ways to save money in taxes.   By the time the 2009 tax season ends on April 15th, we are almost a trimester into the 2010 tax year.   This is the time to reflect and ask yourself what you will do differently in 2010 ...

Read More →