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...]
Tax Policy
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Tax reform attacks IRA “recharacterization”
Thinking about moving your retirement money to a Roth IRA? Be careful before you do! You see, when you convert a traditional IRA to a Roth IRA, and then reverse the transaction (by switching the account back to traditional IRA status), the reversal is characterized by the IRS as a “recharacterization.” If you have a sizable accumulation in your traditional IRA, the … [Read more...]
Tax reform’s effect on partnerships and LLCs
The Tax Cuts and Jobs Act made a number of changes that affect multi-member partnerships and LLCs. Most of these changes will put a smile on your face, but a few may cause some frowns. How will your business fare under the new law? We’ll tell you the good, the bad, and the ugly when you read my new article titled Tax Tips: TCJA Changes Affecting Partnerships and LLCs and … [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...]
Hit with IRS penalties? Here’s how to pay $0
If you or your corporation files your tax return late, or fails to pay your taxes on time, you could face big penalties. Naturally, you’d think you’d have to pay them. Not true! When you know how to play the game, and learn which buzzwords to use when talking to the IRS, they will show you mercy and forgive those penalties. What’s the first step you need to take to avoid … [Read more...]