8 results for tag: Tax Deductions
Don’t Expose Yourself with Improper Use of the $75 Rule
When the $75 rule applies, you don’t need a receipt.
The problem with this rule is that it is often thought to apply to all tax deductions. That’s wrong.
Now, think of the taxpayers who incorrectly apply the $75 rule to all of their tax deductions. They are exposed to a massive loss of deductions and likely some penalties too.
The $75 Rule
IRS Reg. Section 1.274-5(c)(2)(iii) contains the $75 rule.1 Notice 95-50 contains a clear explanation of what the $75 rule applies to.2 Here’s how it works:
You don’t need a receipt for business travel expenses that are less than $75, with two exceptions: (1) you always need a receipt for ...
2022 Last-Minute Year-End General Business Income Tax Deductions
The purpose of this article is to get the IRS to owe you money.
Of course, the IRS will not likely cut you a check for this money—although, in the right circumstances, that will happen. But in most cases, youʼll probably realize the cash when you pay less in taxes.
This article gives you six powerful business tax deduction strategies you can easily understand and implement before the end of 2022.
1. Prepay Expenses Using the IRS Safe Harbor
You have to thank the IRS for its tax-deduction safe harbors.
IRS regulations contain a safe-harbor rule that allows cash-basis taxpayers to prepay and deduct qualifying expenses up to 12 ...
Best Health Deduction for Solo Owner-Employee of a C Corporation
Question
I have a friend who is the sole employee of his C corporation. Can he continue having his C corporation reimburse him for his health insurance payments? If I am interpreting what I've read and heard correctly... “if you have only one employee, then you are exempt from the Affordable Care Act (ACA) rules.”
My Question: Can the reimbursement appear in the C corporation’s tax return as a health insurance reimbursement, or is there something special I need to do to account for this?
Answer
First, “yes,” you understand this correctly. The C Corporation with one employee is exempt from the Affordable Care Act (ACA). And yes, ...
How Will You Deal with the New 62.5 Cents Mileage Rate?
Well, the IRS woke up and noticed that average gas prices across the United States now exceeded $5.00 a gallon and took action that might help you a bit.
Small businesses that qualify to use and do use the standard mileage rate can deduct 62.5 cents per business mile from July 1 through December 31, 2022. That’s an increase of 4 cents a mile.
This brings up a practical question: What to do if you track business mileage using the three-month sample method?
Three-Month Sample Basics
As a reminder, here are the basics of how the IRS describes the three-month test:
The taxpayer uses her vehicle for business use.
She and other ...
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 ...
SEP-IRA vs Solo 401(k): Which Should You Choose?
Parts of this article are published with permission from Bradford Tax Institute, © 2022 Daniel Morris, Morris + D’Angelo
One way to multiply your net worth is to let the government help.
Hereʼs How: With both the SEP IRA and the solo 401(k) retirement plans, your investment in your tax-favored retirement
Creates tax deductions for the money you invest in the plan,
Grows tax-deferred inside the plan, and
Suffers taxes only when you take the money from the plan.
Example: You invest $1,000 a month in your retirement. You are in the 40 percent tax bracket (combined federal and state), and you earn 10 percent on your investments. At the ...
14 Tax Reduction Strategies for the Self-Employed
It's a brand new 2022, 2021 has ended, and either you already have your 2021 taxes squared away or you're filing an extension so that you can figure out how to optimize your tax avoidance strategies for the new business you started during the COVID-19 Pandemic in 2021.
Let's get your mindset and strategic thinking for 2022 heading in the correct direction with the following 14 Tax Reduction Strategies for the Self-Employed.
Parts of this article are published with permission from Bradford Tax Institute, © 2021 Daniel Morris, Morris + D’Angelo
In this article, you will find some related articles that I've previously written with the nuts ...
2021 Last-Minute Year-End Tax Strategies for Marriage, Kids, and Family
Parts of this article are published with permission from Bradford Tax Institute, © 2021 Daniel Morris, Morris + D’Angelo
If you have children under the age of 18 and you file your business tax return as a proprietorship or partnership, you can find big savings in the work your children do for your business.
And if you operate as a corporation, don’t neglect to hire your children; there are good savings for you there, too.
In this article, you will find five year-end tax-deduction strategies that apply if you are getting married or divorced, have children who did or could work in your business, and/or have situations where you give ...