How does the tax code treat a W-2 statutory employee for income tax, payroll tax, business deduction, and Section 199A qualifications? This is the question we’ve been asked by a concerned insurance agent. He wants to know if he’ll qualify for the Section 199A deduction on his W-2 statutory income. He also wants to know how he should handle his net 1099 mutual-fund sales … [Read more...]
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Avoid Penalties—Give Notice of 2019 HRA Medical Plan on Oct. 2
Want to help your employees with their medical expenses? Then consider establishing a qualified small-business health reimbursement account (QSEHRA). It could be great for your employees and for you. IMPORTANT: Make sure your QSEHRA is in place on or before October 2! There are three reasons why you should act by October 2: Reason #1: You’ll avoid penalties Reason #2: … [Read more...]
How to survive a business-mileage audit
IRS auditors are human. (Despite what you may think.) This means that auditors aren’t always familiar with every nuance of the tax code and so occasionally get things wrong. For example, you may be keeping a 90-day mileage log, but your IRS auditor may disallow all of your auto expenses because you can’t provide a 12-month mileage log. And the IRS auditor would be be … [Read more...]
What tax reform did to your tax-free “supper money”
It’s a sad fact… The Tax Cuts and Job Act took a big bite out of a bunch of valuable business-meal and entertainment deductions. One really nice one that that took a 50-percent hit was the “supper money” deduction. What is that? It’s the fringe benefit that lets you provide your employees (and yourself!) with tax-free meal money when you’re working late. That’s right. … [Read more...]
An S corporation “reasonable compensation” alert
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...]