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...]
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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...]
Conflicting IRS rules for deducting your business gym
Thinking about setting up a tax-deductible gym for your employees? That makes a lot of sense. They’ll appreciate the chance to stay fit. And appreciate you for providing a wonderful fringe benefit. But be careful. Ever happy to confuse you, the IRS has created two different sets of regulations from two conflicting code sections. Want to make sure you follow the right … [Read more...]
Does moving your W-2 to Schedule C increase your taxes?
If you qualify to report your W-2 wages on Schedule C (to avoid losing your employee business expenses), will you get any credit for the FICA taxes withheld from your W-2? And another question … would you get any credit for the employer matching the FICA taxes? If you believe that a large part of your tax savings could go down the drain (through the additional … [Read more...]