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Archives for May 2018

2018 – 05/29 – Putting your child on your business’s payroll for the summer may make more tax sense than ever

For business owners with kids in high school or college, hiring them for the summer can provide many benefits. One is tax savings. By shifting business income to a child as wages for services performed, you can turn high-taxed income into tax-free or low-taxed income. The Tax Cuts and Jobs Act’s near doubling of the standard deduction means your child can shelter more income from taxes. Changes to the “kiddie tax” make income shifting via earned income rather than unearned income even more appealing. Many rules apply; contact us to learn more.

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2018 – 05/15 – Be aware of the tax consequences before selling your home

In many parts of the country, summer is peak season for selling a home. If you’re planning to put your home on the market soon, don’t neglect to consider the tax consequences. The TCJA preserves the home sale gain exclusion, so if you’re selling your principal residence, you can exclude up to $250,000 ($500,000 for joint filers) of gain, as long as you meet certain tests. A loss generally won’t be deductible, but if part of your home is rented out or used exclusively for your business, the loss attributable to that portion might be. Contact us with any questions.

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2018 – 05/21 – The TCJA changes some rules for deducting pass-through business losses

The Tax Cuts and Jobs Act restricts the losses that owners of pass-through entities (including sole proprietors) can currently deduct. For tax years beginning in 2018 through 2025, an “excess business loss” can’t be deducted in the current year. This is the excess of your aggregate business deductions for the tax year over the sum of 1) your aggregate business income and gains for the tax year and 2) $250,000 ($500,000 if you’re a married joint-filer). The excess business loss is carried over to the next tax year. Additional rules apply. Contact us for details.

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2018 – 05/18 – IRS issues guidance to ease transition to FASB’s new revenue recognition rule

In 2014, a new accounting standard on how to recognize revenue from contracts was issued by the Financial Accounting Standards Board (FASB). The standard goes into effect in 2018 for public companies and in 2019 for private ones. Now the IRS is allowing a new automatic change in accounting method for businesses to use to conform with the new financial accounting standard. This will allow for more book-tax conformity and facilitate accounting method change requests associated with adopting the new standard. Contact us for help implementing the changes.

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2018 – 05/15 – Be aware of the tax consequences before selling your home

In many parts of the country, summer is peak season for selling a home. If you’re planning to put your home on the market soon, don’t neglect to consider the tax consequences. The TCJA preserves the home sale gain exclusion, so if you’re selling your principal residence, you can exclude up to $250,000 ($500,000 for joint filers) of gain, as long as you meet certain tests. A loss generally won’t be deductible, but if part of your home is rented out or used exclusively for your business, the loss attributable to that portion might be. Contact us with any questions.

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2018 – 05/14 – Can you deduct business travel when it’s combined with a vacation?

This summer are you going on a business trip in the U.S. and tacking on some vacation days? Are you a business owner or self-employed? You may be able to deduct some of your expenses. Transportation costs to and from the business activity location may be 100% deductible if the primary reason for the trip is business. Out-of-pocket expenses for business days are generally fully deductible. Examples include lodging, meals (subject to the 50% disallowance rule), seminar and convention fees, and cab fare. Additional rules and limits apply. Contact us with questions.

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2018 – 05/07 – IRS Audit Techniques Guides provide clues to what may come up if your business is audited

IRS examiners use Audit Techniques Guides (ATGs) to prepare for audits, and small business owners can use them, too. Many ATGs target specific industries, such as construction. Others address issues that frequently arise in audits, such as executive compensation and fringe benefits. Although ATGs were created to enhance IRS examiner proficiency, they also can help small businesses ensure they aren’t engaging in practices that could raise red flags with the IRS. For more information on ATGs and red flags that may be relevant to your business, contact us.

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2018 – 05/04 – Profits: How low can you go?

Are your profits falling compared to revenue and assets? To find the cause, study the three major components of your income statement: 1) revenue, 2) cost of sales, and 3) selling and administrative expenses. Our auditors can help you monitor trends by computing your gross margin, profit margin, return on assets and other financial ratios. We can also identify potential industrywide and company-specific reasons for the decline, as well as possible solutions to get your performance back on track.

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2018 – 05/01 – Get started on 2018 tax planning now!

With the April 17 individual income tax filing deadline behind you (or with your 2017 tax return on the back burner if you filed for an extension), you may be hoping to not think about taxes for the next several months. But for maximum tax savings, now is the time to start tax planning for 2018. It’s especially critical to get an early start this year because the Tax Cuts and Jobs Act has substantially changed the tax environment. We can help you determine how the new law affects you and what strategies you should implement to minimize your tax liability.

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2018 – 04/24 – Tax record retention guidelines for individuals

What 2017 tax records can you toss once you’ve filed your individual return? None. But it’s the perfect time to go through old tax records and see what you can discard. A common rule of thumb is to keep tax records for at least six years from filing, after which the IRS generally no longer can audit your return or assess additional taxes, even if your income was understated. But hang on to certain records longer. Examples include tax returns themselves, W-2 forms, and records related to real estate, investments or retirement accounts. Contact us with questions.

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