tax resolution: TCJA Winners and Losers—Business on the Chopping Block - 12/16/24 10:38 AM
Prepare for tax changes.
The Tax Cuts and Jobs Act (TCJA) has been part of our tax landscape for nearly seven years, shaping how businesses and individuals plan their finances. With an eye toward the end of 2025, when many key provisions expire, here are some critical changes that could affect you and your business.
Expiring Provisions: Mixed News for Businesses
Some of the most impactful changes, including lower individual tax rates and the qualified business income (QBI) deduction, are slated to sunset after 2025. Here are some highlights:
Lower individual tax rates. Rates under the TCJA are generally lower, but thresholds for higher … (1 comments)

tax resolution: U.S. Supreme Court Makes It Easier to Challenge IRS Regulations - 12/16/24 10:35 AM
Over the years, the IRS has enacted voluminous regulations that interpret ambiguous tax code provisions or fill in administrative gaps.
Indeed, IRS regulations dwarf the tax code: the tax code is about 2,600 pages long, while all the rules written by the IRS amount to over 16,000 pages.
Think an IRS regulation is unfair or overreaches? Until now, there wasn’t much you could do about it. A 40-year-old legal rule called Chevron deference (or the Chevron doctrine) required courts to defer to government regulations so long as they were reasonable. After all, the IRS and other federal agencies were the experts.
Because of … (2 comments)

tax resolution: Tax Credits for EVs: What’s New? - 12/16/24 10:32 AM
If you’re in the market for a new car, the federal government would like you to purchase an electric vehicle (EV) or a plug-in hybrid EV (PHEV).
In 2022, Congress enacted the Inflation Reduction Act, which revamped and expanded tax credits for EVs purchased during 2023 and later.
As a result of the new law, there are four ways you can benefit from a federal EV tax credit:
Purchase an EV and claim the clean vehicle credit. Purchase a used EV that qualifies for the previously owned clean vehicle credit. Purchase an EV for business use and claim the commercial clean … (2 comments)

tax resolution: Deducting Long-Term Care Insurance Premiums - 08/23/24 12:49 PM
Long-term care costs can be substantial, and neither Medicare nor Medicaid provide comprehensive coverage for most people. Long-term care insurance can help protect your finances, and there may be ways to deduct the premiums, depending on your business structure.
Here are four key points to consider:
C corporations can provide long-term care insurance as a fully deductible, tax-free benefit to owners. Sole proprietors or single-member LLCs with a spouse as the only employee may be able to deduct 100 percent of the premiums through a Section 105-HRA plan. S corporation owners, partners, and other sole proprietors may be able to deduct premiums … (5 comments)

tax resolution: Tax compliance: How many years to file? - 05/14/24 12:36 PM
The IRS is having a big problem dealing with non-filers – individuals who fail to file their required tax returns. It’s an issue that’s been around for years, but one that hasn’t been a top priority for the IRS of late. As a result, there’s been a substantial increase in the amount of taxes that aren’t being paid. The amount of money that’s not being paid in taxes has almost doubled in recent years, from $39 billion in 2016 to $77 billion in 2021. But now, the IRS is making a new effort to fix the problem, starting with high-income taxpayers.
In general, the … (1 comments)

tax resolution: Protect yourself from costly payroll fraud - 05/14/24 11:42 AM
When you own and operate a business, you must exercise vigilant oversight, including watching over your payroll taxes. Here’s an example of why.
Rodney Taylor entrusted his corporation’s accounting and bookkeeping to Robert Gard, CPA. Over several years, Mr. Gard embezzled between $1 million and $2 million, including payroll taxes.
Despite Mr. Gard’s wrongdoing, the ultimate responsibility to settle the payroll taxes with the IRS fell on Mr. Taylor as the business owner and “a responsible party” under tax law.
The Taylor case highlights a crucial lesson: while delegation of duties is a part of business, you cannot transfer your responsibility for compliance … (2 comments)

tax resolution: No business income, no home office deduction: Wrong. - 05/14/24 11:39 AM
You may have heard you cannot claim a home-office deduction without business income. That’s not accurate, as I explain below.
Points to Consider
Claim business deductions with no business income. Even if your business did not generate income this year, you should claim all business deductions. Such deductions might create a net operating loss (NOL), which would carry forward to offset future taxable income. Claim the home office with no business income. Claim the home-office deduction even with no business income. The home-office expenses not allowed this year carry over to future years in the separate home-office deduction bucket. And this gets … (4 comments)

tax resolution: Overfund a Section 529 Plan? Consider a Roth IRA rollover - 05/14/24 11:35 AM
Have you established, or are you considering, a Section 529 savings plan for a child, grandchild, or other family member?
Such plans are a great way to help pay for a person’s college education. Contributions are not federally tax deductible, but they grow tax-free, and you can withdraw them tax-free to pay higher education expenses.
But what happens if your child or other beneficiary doesn’t use all the money in the 529 account or decides not to go to college? Indeed, many young people are choosing not to attend college these days.
What do you do with the money in an overfunded 529 … (0 comments)

tax resolution: Act Now! Get your safe-harbor expensing in place - 09/08/23 12:15 PM
For 2024, you can elect the de minimis safe harbor to expense assets costing $2,500 or less ($5,000 with audited financial statements or similar).
The term “safe harbor” means that the IRS will accept your expensing of the qualified assets if you properly abided by the safe harbor rules.
Here are three benefits of this safe harbor:
Safe harbor expensing is superior to Section 179 expensing and depreciation because you don’t have the recapture period that can complicate your taxes. Safe harbor expensing simplifies your tax and business records because you don’t have the assets cluttering your books. The safe harbor does not … (1 comments)

tax resolution: Defining real estate investor and real estate dealer - 09/08/23 11:35 AM
I have great news! You can have in your real estate portfolio both investor and dealer properties. This distinction is significant for tax purposes.
Here’s a snapshot of the potential tax differences:
Suppose you profit $90,000 from a property sale:
As a dealer, your tax could be up to $46,017. As an investor, it might be only $21,420. That’s a potential savings of $24,597 in taxes for investors!
You look at every property individually to determine its classification and make sure you identify each property in your records as either an investment or dealer property. Not doing so can lead to complications with the … (2 comments)

tax resolution: Hobby loss rule raises its ugly head - 09/08/23 11:30 AM
I am bringing to your attention some recent developments regarding the “hobby loss rule.” Given that you have diverse sources of income, some of which might be considered hobbies, I believe this information could be of great importance to you.
What Is the Hobby Loss Rule?
The hobby loss rule might apply to you if you have any activity that results in a tax loss. Under this rule, you might lose out on your deductions and end up paying taxes on the income you earned from the hobby.
For instance, if you earned $200,000 from a hobby and incurred expenses of $350,000, the … (3 comments)

tax resolution: Update on State Pass-Through Entity Taxes Beating the SALT - 08/17/23 11:46 AM
Here are some critical updates on the pass-through entity tax (PTET), which has recently become the rule in most states rather than the exception.
The PTET enables owners of pass-through businesses, such as S corporations and multi-member LLCs, to navigate around the $10,000 annual limit on state and local taxes (SALT).
How PTET Works
The PTET process is relatively straightforward. A pass-through entity (PTE) can choose to pay state income tax on its business income, which would otherwise pass on to its owners.
The PTE then claims a federal business expense deduction for these state income tax payments. Next, the states allow the … (3 comments)

tax resolution: Refresher on the Kiddie Tax and how to avoid it - 07/24/23 08:20 AM
I wanted to take this opportunity to touch base regarding the federal income tax rules on the “kiddie tax” and its potential impact on your financial strategy for your child(ren).
In brief, the kiddie tax was enacted by Congress to prevent parents from passing investment income to their children, who typically have a lower tax rate. Under the kiddie tax rules, a portion of a child’s net unearned income may be taxed at the parent’s marginal federal income tax rate. The kiddie tax applies to children up to age 24, assuming they meet certain criteria.
The kiddie tax can result in higher taxes … (2 comments)

tax resolution: Proving expenses for business travel - 07/24/23 08:04 AM
Here’s some crucial information on how to document expenses during business travel.
Corporation or proprietorship? If you operate as a corporation, the corporation should reimburse you for the travel expenses or pay for them directly. Remember, you can’t deduct employee business expenses on Form 1040 anymore due to changes brought by the Tax Cuts and Jobs Act for 2018–2025.
Tax diary for business travel? Although not obligatory, keeping a timely record of your business travel expenses is essential. This record should prove each expenditure’s amount, time, place, and business purpose.
Travel meals versus other travel expenses? Due to specific legislation, tax deductions for travel … (1 comments)

tax resolution: Using Family Loans to Secure Better Home Loan Interest Rates - 06/12/23 09:02 AM
Here’s some information on how you can help a family member buy a home by making a loan to them while ensuring that you and the family member benefit from a tax-smart loan structure.
With the current national average interest rates for 30-year and 15-year fixed-rate mortgages at 6.71 percent and 6.07 percent, respectively, family loans can offer a much more attractive alternative. By charging the Applicable Federal Rate (AFR) as interest, you can give the borrower a good deal without giving yourself a tax headache.
The IRS issues new AFRs for term loans every month. The rates for May 2023 are as … (2 comments)

tax resolution: Basic Estate Planning - 06/12/23 08:55 AM
You need an estate plan, regardless of whether or not you are among the ultra-rich. As recent news has shown, even those who have won the lottery or have substantial wealth can fall victim to poor estate planning.
While federal estate taxes may not concern you, you need a will to have your wishes honored after your death. Without a will, state law dictates the distribution of your assets, which may not align with your intentions. Additionally, if you have minor children, a will allows you to name a guardian to care for them in the event of your untimely passing.
Your heirs … (2 comments)

tax resolution: It's not too late: qualify now for your 2020 & 2021 ERC - 06/05/23 11:35 AM
I am writing about a significant opportunity for your business to qualify for the Employee Retention Credit (ERC).
As we are in 2023, you still have the chance to qualify for the ERC for the 2020 and 2021 calendar years and potentially recover a substantial amount of money.
The ERC is a refundable tax credit against certain employment taxes. To claim this credit, you must amend your 2020 and 2021 payroll tax returns, which could seem cumbersome but is well worth it considering the financial upside. For a business with a dozen employees and meeting the qualifications for maximum tax credits, you … (1 comments)

tax resolution: Claim your overlooked 2020 & 2021 COVID sick & family leave credits today - 06/05/23 11:27 AM
I am bringing to your attention an opportunity that might result in significant tax benefits for you or your corporation—the unclaimed 2020 and 2021 COVID-19 sick and family leave credits.
The IRS allows individuals and corporations to claim these credits to alleviate the pandemic’s impact. But many missed this opportunity on their previous tax returns.
If you did not claim these credits for 2020 and 2021, it’s not too late. You can now claim the credit by filing an amended return. Moreover, if you had a net profit of $143,866 on Schedule C or equivalent W-2 wages from your corporation, you could qualify … (2 comments)

tax resolution: Ugly rule for owners of S Corporations deducting health insurance - 06/05/23 11:19 AM
When your S corporation covers or reimburses your more-than-2-percent-shareholder-employee health insurance expenses, it classifies the payments as box 1 W-2 wages but not box 3 or box 5 wages.
When calculating the amount eligible for the Form 1040 self-employed health insurance deduction, you must use your Medicare wages (listed in box 5 of Form W-2) as your “earned income” rather than the amount reported in box 1.
Here are two examples that show you the impact of this rule:
Ted’s S corporation pays him $0 in cash wages and reimburses him $18,000 for health insurance. His W-2 shows $18,000 as box 1 wages … (6 comments)

tax resolution: Tax credits for electric vehicles - the latest from the IRS - 05/03/23 11:56 AM
The IRS recently issued new guidance on electric vehicles. There are four ways you can potentially benefit from a federal tax credit for an EV you place in service in 2023 or later: 
Purchase an EV and claim the clean vehicle credit. Lease an EV and benefit from the lessor’s EV discount. Purchase a used EV that qualifies for the used EV tax credit. Purchase an EV for business use and claim the new commercial clean vehicle tax credit. The new clean vehicle credit is available through 2032, with a maximum credit of $7,500. 
To qualify for the clean vehicle credit, you … (3 comments)