166 results for author: Daniel Morris


Change Independent Contractors into Employees Trouble-Free

You've read horror stories about how the IRS audits business owners and deems their 1099 independent contractors W-2 employees—and then assesses tens (or hundreds) of thousands of dollars in back payroll taxes, interest, and penalties. Are you one of those horror stories? Okay, let’s say you are one of them. You know that you are an IRS target because you have workers who really should be employees, but you treat them as independent contractors. And you are afraid that if you change now, the IRS will see that change, audit your prior years, and charge big bucks for your mistake. What should you do? Keep the workers as independent contra...

Increase Your Tax Deductions Using the Business-Mileage Rule

Request Please clarify how to properly record commuting mileage, especially if you do other trips before and after stopping at your regular office. Response To record commuting mileage, you simply write in your appointment calendar (or other daily record or digital app): home to office, 10 miles, commute. Ugh! We Don’t Like That We absolutely, positively don’t like commuting mileage. You should dislike it, too. It’s personal. It’s not deductible. But with knowledge, it’s avoidable. Let’s eliminate commuting and make those trips from your home to your office deductible. The law gives you two ways to eliminate ...

The IRS Wants to Know about Your Crypto

The IRS really wants to know about your Bitcoins and other Cryptos. It starts at the top of the first page of your Form 1040, where you find the following question right after the spaces for your name and address: At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency? At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency? All taxpayers must answer this question under penalty of perjury, even those who have never heard of Bitcoin and don’t know what cryptocurrency is. You can’t ...

Avoid This Payroll Tax Nightmare

Oh my! ... Don’t let this happen to you. Here’s what happened to Mr. Kazmi. First, a little background. Urgent Care Center Inc., an Illinois corporation, employed Mr. Kazmi as a part-time hourly bookkeeper. He had no ownership interest in Urgent Care. He was not an officer of Urgent Care. His name was not on any of Urgent Care’s bank accounts. He did not have check-signing authority for Urgent Care or any power to make payments on behalf of Urgent Care. At all times, Mr. Kazmi worked under the authority and direction of Dr. Senno, the sole owner of Urgent Care, an S corporation. The Problem Urgent Care did not pay its ...

Home-Office Deduction If You Operate as a Corporation

Question What does the IRS audit manual say about the home office for an individual who operates his or her business as a corporation? Answer You will be interested in two boilerplate explanations from the Internal Revenue Manual that examiners use to explain why the IRS is denying the home-office deduction: We [the IRS] have disallowed your deductions for office-in-the-home expenses because you have not established that it was for the convenience of your employer. Voluntary, vocational, or incidental use of part of your home in connection with your employment does not entitle you to a business deduction. If you rent all or part ...

$75 Receipt Rule for Business Vehicles

The Question I was having a conversation with a tax preparer who says there is no such thing as a $75 rule for receipts on vehicle expenses. He claims that we need receipts for all car expenses. Then I began to ponder... isn't there a rule that states that we do not need receipts if the vehicle expense is less than $75? Answer Yes! The $75 rule is contained in IRS Regulation 1.274-5(c)(2)(iii), and the best explanation of what this rule says is found in IRS Notice 95-50,2 which states that the $75 rule applies to travel, entertainment, gifts, and listed property. IRC Section 280(f)(d)(4) states that “Listed Property” includes any ...

Is Now the Time to Transfer Your Home to Your Adult Child?

Let's say that your adult child wants to enter the world of homeownership and is looking to buy a home in today’s "Overheated" real estate market. Needless to say, anymore, it’s a struggle against the odds. Meanwhile, you’re ready to check out of your current home and explore your retirement possibilities. Maybe you want to downsize or move to a warmer climate or a lower-tax or no-tax state. Whatever the reason, you’re financially set and don’t really need the money from selling your home. So, consider the following options to help your home-starved adult child. Here, I will explain the Federal Income and Estate Tax Consequences....

Owe Taxes for Misclassified Workers? Section 530 to the Rescue!

Are you living every small business owner’s worst nightmare: an IRS audit? Okay, that’s bad. But even worse, suppose the IRS asserts that many of your 1099 independent contractors are W-2 Employees. Now you owe tens of thousands of dollars in unpaid payroll taxes! What are you going to do? Before you throw in the towel and make a panic-stricken call to your friendly neighborhood bankruptcy lawyer, hold on. There may be a way out! You may qualify for the safe-harbor provisions of Section 530. Classifying Your Workers: Employees or Independent Contractors? As a business owner, you are obligated to collect and remit payroll taxes for ...

Deducting Mortgage Interest When Your Name Is Not on the Deed

Tax law has an amazing break for unconventional homeowners. You can deduct your mortgage interest payments even when the deed to the house and the mortgage are in someone else’s name. Here’s what happened to Sue Davis. Sue could not personally qualify for a home loan. Her parents stepped in to help. They bought the house and signed the mortgage. But Sue lives in the home and pays all the expenses of the property, including the property taxes and the mortgage. Using a little-known tax rule, Sue deducts the mortgage interest payments she makes on her Form 1040. What’s even more interesting is that Sue found out about this ...