The President signed the Inflation Reduction Act into law on August 16, 2022. It contains some valuable tax credits for homeowners. When it comes to taxes, nothing is better than a tax credit since it is a dollar-for-dollar reduction in the taxes you must pay (unlike a tax deduction that only reduces your taxable income).
To date, 29 states have enacted pass-through entity (PTE) taxes that can enable owners of pass-through entities such as partnerships, multi-member LLCs, and S corporations to effectively get around the federal $10,000 limit on deducting state and local taxes (SALT). The 29 states are Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Georgia, Idaho, Illinois, Kansas, Louisiana,
If you had W-2 employees in 2020 and/or 2021, you need to look at the Employee Retention Credit (ERC). As you likely know, it’s not too late to file for the ERC. And now is a good time to get this done. You can qualify for 2020 credits of up to $5,000 per employee and
There’s good and bad news if you’re in the market for an electric or plug-in hybrid electric vehicle. The good news is that the newly enacted Inflation Reduction Act includes a wholly revamped tax credit for electric vehicles that starts in 2023 and continues through 2032. The bad news is that the credit, now called
All good things must come to an end. On December 31, 2022, one of the best tax deductions ever for businesses will end: 100 percent bonus depreciation. Since late 2017, businesses have used bonus depreciation to deduct 100 percent of the cost of most types of property other than real property. But starting in 2023,
You may have heard that the newly enacted Inflation Reduction Act includes an expanded tax credit for electric vehicles. Although this personal credit has gotten most of the publicity, the new law launched a new commercial clean vehicle credit—specifically for business-use electric vehicles. And it’s much better than the credit for personal-use electric vehicles. The
Do you qualify for the employee retention credit (ERC)? Did you claim it? It’s not too late. You can still amend your 2020 and 2021 payroll tax returns. Remember, this can be worth up to $5,000 per employee in 2020 and up to $7,000 per employee per quarter for the first three quarters of 2021,
Inflation is seldom a good thing. But when it comes to investing, the U.S. Treasury Department has an inflation opportunity that’s downright amazing. You can buy bonds that pay 9.62 percent—tax-deferred—with no downside risk, and with no state or local income taxes when you cash them in. If you buy now, you earn that 9.62
Let’s say you’re considering converting your partnership into an S corporation. The reason might be to reduce exposure for you and the other owners to Social Security and Medicare taxes, which come in the form of the self-employment tax for partners. Specifically, each partner’s share of net partnership income is usually fully exposed to the
The Fed is finally taking aggressive action to fight inflation, but will it work? Where’s the stock market headed? Who knows? Real estate might be a good inflation hedge, but it’s a non-liquid asset and no sure thing. Clearly, this is not a great environment for investors or retirement savers. If you are thinking of
Is the mileage rate sticking it to you? Could you increase your tax deductions by switching from the IRS mileage rate to the actual-expense method? If so, you will be happy to learn you can make that switch. When you choose the mileage rate, you elect out of the actual-expense method and also elect out
You may have joined the Great Resignation, maybe temporarily or maybe for good. Or your non-working status might have nothing to do with the Great Resignation. For instance, you could be a stay-at-home parent. In any case, as a spouse with no tax-defined earned income, you might want to continue saving for retirement in a
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. From 2018 through 2025, the TCJA caps itemized deductions for state income taxes (or general sales taxes if elected instead of income taxes), state
Do you own investment property? What about a small business? Sooner or later, you will probably want to sell. One of the downsides of selling a business or investment property is the huge tax bill at the end. Profits are likely subject to the capital gains tax—perhaps at a much higher rate than you expect.
Here’s a question I received from one of my clients: I will hire my 15-year-old daughter to work in my single-member LLC business, and I expect to pay her about $12,000 this year. Do I pay her through payroll checks and file a W-2? My Answer Yes. And W-2 payment is essential.
During much of 2020 and 2021, you may have qualified for the Employee Retention Credit (ERC). With the ERC, you found (or could find) tax credits of up to $26,000 per employee. That’s a lot. With 10 employees, that’s $260,000. Key point. If you have not claimed the ERC, you can amend your 2020 and
Through October 2022, you can buy Series I bonds that pay 9.62 percent interest. And you receive that rate for six months from the time of purchase. What happens after that? On November 1, 2022, the U.S. Treasury Department sets a new six-month rate equal to the fixed rate (currently zero) plus the Consumer Price
Here’s a question: Does a member of a limited liability company (LLC) or a partner in a partnership have to pay self-employment taxes (Social Security and Medicare tax) on the member’s or partner’s share of the entity’s income? Incredibly, the answer is not always clear. If you are a general partner in a
If you are reading this post you probably report your business on Schedule C of your Form 1040 or Form 1065 (for Partnerships). Have you noticed that the self-employment tax significantly drains your cash? The S corporation may plug a good chunk of that leak because only the W-2 wages that the S corporation
The IRS noticed that average gas prices across the United States exceeded $5.00 a gallon and took action. 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 up 4 cents a mile. This brings
Are you loving the 21 percent corporate tax rate and now keeping more money inside the corporation? If so, beware of the accumulated earnings tax. You can easily overlook it. You likely don’t have the proper documentation to avoid it. And it’s expensive. The accumulated earnings tax is a 20 percent corporate-level penalty
It is getting increasingly popular for individuals to use self-directed IRAs to invest in alternative investments—that is, investments in things other than stocks, bonds, CDs and the like. The single most popular alternative investment for self-directed IRAs is real estate. With real estate values continuing to climb, you may be thinking about establishing your own
Cryptocurrency such as bitcoin is all the rage these days. Crypto is not legal money. It is property, similar to gold. Like gold, its use can result in taxable income. The IRS is concerned that you and millions of Americans are using crypto without paying tax on the earnings. To clarify that it expects you
Do you own or advise a corporation, limited liability company (LLC), limited partnership, limited liability partnership, limited liability limited partnership, or business trust? Or are you planning to form one of these entities? If so, be alert. There’s a new federal filing requirement coming. Back in 2021, Congress passed a new law called the Corporate
You have 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
You may not have thought of this, but taking a cruise ship to Mexico for a business meeting is acceptable as a deductible form of transportation. Because Mexico is in the tax law–defined North American area, the law says that you need no stronger business reason to deduct your trip to Mexico than you need
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 commuting from your home to your outside-the-home office: 1. Make a
Most companies can benefit from the advice and expertise of a Chief Financial Officer. But, for most small and medium businesses, the cost of another full-time addition to the C-Suites just doesn’t make sense. Enter the virtual CFO, a professional from outside the organization who fills the role as needed. Not sure how a virtual
Every month, attorneys have complex accounting to do, and this task can get away from you if you don’t keep up with it or if you don’t have a professional accountant on-staff. An attorney’s monthly accounting includes billing for clients, payroll (weekly or bi-weekly or bi-monthly), and managing their Interest on Lawyers Trust Account (IOLTA),
Are you thinking about streamlining some of your financial functions to help trim costs and increase your ROI? Or perhaps you want to hire someone to take care of your accounting and financials so you can focus more on the income-producing aspects of your business but don’t have enough in your budget to employ a
