Here are some common things that workers tend to do: check Blackberries or iPhones at home after office hours; catch up on work email on weekends; burn the midnight oil to crunch on critical projects; travel for work.
Proving “Material Participation” to Deduct Business Losses
Small Business CPA Insight
You can only deduct losses from an S corporation, partnership or LLC if you “materially participate” in the business. If you don’t, your losses are generally “passive” and can only be used to offset income from other passive activities. Any excess passive loss is suspended and must be carried forward to future years.
Short-Term Rental, Special Treatment
If you are one of the many taxpayers who rents out a first or second home using rental agents or online rental services that match property owners with prospective renters, then some special tax rules may apply to you.
Back-Door Roth IRAs
Many individuals who are saving for retirement favor Roth IRAs over traditional IRAs because the former allows for both accumulation and post-retirement distributions to be tax-free. In comparison, contributions to traditional IRAs may be deductible, earnings are tax-deferred, and distributions are generally taxable. Anyone who is under age 70.5 and who has compensation can make a contribution to a traditional IRA (although the deduction may be limited). However, not everyone is allowed to make a Roth IRA contribution, and other regulations still apply.
Can You Deduct Employee Expenses?
If you are an employee, you may be curious about which expenses relating to your employment are deductible on your tax return. This is a complicated area of tax law, and many expenses are deductible only if the expense is a “condition of employment” or is for the “convenience of the employer,” two phrases that are effectively the same.
The deductions available to each employee vary significantly based upon that individual’s unique situation.
Minimizing Tax on Social Security Benefits
Whether your Social Security benefits are taxable (and, if so, how much of them are) depends on a number of issues. The following facts will help you understand the taxability of your Social Security benefits.
If you have questions about how these issues affect your specific situation, or if you wish to do some tax planning, please give this office a call.
New Business Startup – Deducting Costs at Tax Time
Before you earn your first dollar, before you are even open for business, your startup can incur considerable expenses. The money you spend opening your business can often be deducted; the IRS allows you to deduct many of these one-time startup costs. Speaking with an accountant in the early stages can help you decide which of these deductions to take – and may also help you discover additional ways to save money as you operate your new startup.
Proving Noncash Charitable Contributions
One of the most common tax-deductible charitable contributions encountered is that of household goods and used clothing. The major complication of this type of contribution is establishing the dollar value of the contribution. According to the tax code, this is the fair market value (FMV), which is defined as the value that a willing buyer would pay a willing seller for the item.
R&D Tax Credits
When it comes to claiming missed R&D tax credits, many taxpayers do not fully understand the rules allowing them to adjust the carryover from years closed by the three-year statute of limitations without filing amended returns. When a taxpayer does not owe any tax on a return, often they fail to take deductions and credits that they are entitled to. Later, when deductions and credits are needed, the taxpayer’s reaction is to try and recoup as much of missed opportunity as possible.
What to Look For in a CPA Firm
Whether it’s for your business or your personal financial needs, hiring a professional accountant is a great way to save yourself time, money, and invest in your future. In fact most people consider their CPA to be one of their most trusted advisors, which makes hiring the right firm an important and often difficult decision. Here are a few key things to consider when deciding if a CPA firm is right for you.