7 results for tag: TCJA


Defeat the $10,000 SALT Cap with the PTE Tax (Part 2)

As I explained in Part 1 last week, a majority of states now allow pass-through entity (PTE) owners to get around the federal $10,000 state and local tax (SALT) deduction cap on individual taxpayers by having their PTE pay state income tax on its income at the entity level. Under this regime, the PTE deducts the state income tax as a federal business deduction, which is not subject to the $10,000 SALT cap. The PTE owners get either a state tax credit for the tax payment or a reduction in their PTE income for state income tax purposes. Either way, they end up with a full (or near full) deduction on their federal income tax returns for the state ...

Defeat the $10,000 SALT Cap with the PTE Tax (Part 1)

Maybe the least popular change brought about by the Tax Cuts and Jobs Act (TCJA) was a first-ever cap on the federal personal income tax deduction for state and local taxes (SALT). During 2018 through 2025, there is a $10,000 cap on deductions for the total of the following: State income taxes, or general sales taxes if elected instead of income taxes, State real property taxes, and Personal property taxes. Thus, for example, if you live in a high-tax state such as California or New York and owe $10,000 or more in property tax, that tax by itself will use up your $10,000 deduction. You’ll get no federal deduction at all for the ...

Self-Employment: Quick and Dirty Guide to Tax Issues and Savings

If you're considering joining the Great Resignation and becoming self-employed to be in charge of yourself, pay attention. Before leaping, here are some things to consider regarding the tax implications. This self-employment thing may not be as rosy as it appears. Here’s the big picture. Don’t Believe the Hype Despite what some may believe, becoming self-employed wonʼt allow you to: Write off all your meals as a business expense, Deduct the cost of taking your friends to sporting events, Deduct all your transportation expenses, and Write off the entire cost of owning or renting a residence that contains your home office. S...

Don’t Rob Yourself of the Home Internet Deduction

Parts of this article are published with permission from Bradford Tax Institute, © 2021 Daniel Morris, Morris + D’Angelo Given the connected nature of remote work these days, you likely use your home internet to do a little or a lot of work. In this article, you will learn how to deduct the cost of your home internet. The rules that apply to the home internet also apply to all the other expenses incurred while working at home, regardless of whether you claim the Home-Office Deduction. Deduction on Schedule C If you operate your business as a sole proprietorship or as a single-member LLC, you file a Schedule C to report your ...

2021 Last-Minute Vehicle Purchases to Save on Taxes

Do you need a replacement business car, SUV, van, or pickup truck? Do you need tax deductions this year? If you answered yes to both questions, you need to examine this article and get ready to smile. Thanks to the Tax Cuts and Jobs Act (TCJA) tax reform, you can write off the cost of a vehicle purchase faster than ever before—including, in many cases, up to 100 percent of the cost in 2021. Get the Timing Right Don’t procrastinate. If you want the vehicle deduction, you need to: Own the vehicle, and Place it in business service on or before December 31, 2021. To ensure compliance with the “placed in service” rule, ...

2021 Last-Minute Year-End General Business Income Tax Deductions

Parts of this article are published with permission from Bradford Tax Institute, © 2021 Daniel Morris, Morris + D’Angelo The purpose of this article is to get the IRS to owe you money. Of course, the IRS is not likely to cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you pay less in taxes. This article gives you six powerful business tax deduction strategies that you can easily understand and implement before the end of 2021. 1. Prepay Expenses Using the IRS Safe Harbor You just have to thank the IRS for its tax-deduction safe harbors. IRS regulations ...

IRS Defines Real Property for Section 1031 Like-Kind Exchanges

The Tax Cuts and Jobs Act (TCJA) tossed an unwanted rule into Section 1031 by forbidding exchanges of personal property. But before we move on, let’s clarify one thing: Section 1031 is not an “exchange,” which is defined by Merriam-Webster as a trade. In a tax code 1031 exchange, you generally would: Engage an intermediary to handle the money and the tax paperwork; Sell your real property; and Buy the replacement property So you are buying and selling, but when you do this under the Section 1031 tax rules, you don’t pay taxes on the sale. Pretty sweet, huh? You are not off the hook. You can look at it this way: with the ...