As we’ve mentioned in past issues of the Tax Reduction Letter, there’s good news for S corporation owners: Tax reform gives you a new 20-percent Section 199A deduction on pass-through income. But be aware… The IRS requires that you pay yourself “reasonable compensation.” If you don’t, you can torpedo your deductions and be forced to pay extra taxes and penalties. Want … [Read more...]
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Don’t let business losses make you an IRS target
It’s a fact… The tax law has always treated your hobby activities unfairly. Now, tax reform under the Tax Cuts and Jobs Act has made things even worse. You see, thanks to this new legislation, you’re prevented from deducting any business expenses against hobby income. That’s right. Tax reform has turned your tax-law-defined, not-for-profit hobby activity into an unfairly … [Read more...]
S Corporation Fringe Benefits after the Recent Tax Reform
The recently passed tax-reform law has a lot to say about fringe benefits for shareholder-employees who own more than 2-percent of their S corporations. The good news? Federal tax law lets you treat the cost of fringe benefits as deductible expenses for your S corporation. The bad news? If you’re a more than 2-percent shareholder, you may have to pay additional taxes … [Read more...]
How to prove travel expenses after tax reform
As you may know, recent tax-reform rules have left travel expense deductions pretty much intact. This means your travel meals are still tax deductible (subject to the 50-percent cut), and there have been no changes to the rules that govern your other travel expense deductions. What also hasn’t changed is the IRS's requirement that you back up all your travel expenses with … [Read more...]
Tax Reform Increases the Tax Benefits of Employing Your Child
Sure. Tax reform has had its downsides, but it also provides some substantial money-saving benefits for business owners. For example, if you (or you and your spouse) own a business, your children can dramatically increase tax benefits for both you and them. That’s a win/win situation too good to pass up! Want to find out how to put a totally legal “hire your child” strategy … [Read more...]