What is an accountable plan? An accountable plan is an expense reimbursement or allowance arrangement that requires employees to substantiate expenses and return unsubstantiated advances. With the plan, the reimbursements are tax-free to recipient employees. And the company can deduct the reimbursements as business expenses. Do you use an accountable plan for your … [Read more...]
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Can the IRS Require Odometer Readings with the Mileage Rate?
When it comes to calculating a deduction for the business miles you drive, Uncle Sam gives you two choices. You can use… 1. The IRS standard mileage method or 2. The actual vehicle expense method In this issue of the Tax Reduction Letter we’ll explain everything you need to know if you’re using the IRS mileage method. Don’t miss this important information. We … [Read more...]
Taxpayer Avoided 15 Hours of Paperwork; Lost $35,000 to the IRS
Most taxpayers find that keeping accurate records is a pain in the neck. But failing to keep these records can cost you a tremendous amount of money. That could be true even when it comes to tracking what you’ve spent over the years on home improvements. We’ve run the numbers on the Pendergrafts and discovered that they avoided just fifteen hours of paperwork that cost … [Read more...]
Avoid an audit: Fix the 1099 prepaid-rent mismatch
Did you prepay your 2019 rent so you could claim a big 2018 tax deduction? That could be a very smart more. Or it could open the door to huge problems for you and your landlord. You see, if you prepare your 1099-MISC based on your checkbook or payment ledgers, it’s very possible you’ll create an incorrect 1099 for your landlord. And an incorrect 1099 that overstates the … [Read more...]
De minimis or 179 expensing, or bonus depreciation?
Thanks to the Tax Cuts and Jobs Act, you now have three ways to write off the entire cost of certain business assets. Which is the best method for you to use? Let’s take a look … Behind door #1 is bonus depreciation. You can use it to deduct 100-percent of the cost of certain business assets. Behind door #2 is the de minimis safe harbor for certain assets costing … [Read more...]