There’s a dangerous myth floating around the Internet. It goes something like this: “If you lose your business records, don’t worry about it. All you have to do is sign an affidavit stating that ‘these are my deductions and I affirm they are correct’ and you’re home free.” If this sounds silly to you, think about how it sounds to the IRS or to a judge! Nope. If you lose … [Read more...]
How to use corporate advances to avoid double taxation
Do you own a C corporation? If you do, you have a nasty double-taxation problem. EXAMPLE: Let’s say your corporation has $10,000 of profits after paying your salary and other expenses. If you want to use that money for personal purposes, you have to: Pay the corporate tax on the income And pay a dividend tax on the transfer from the corporation to your personal bank … [Read more...]
Watch out for the dangerous “side business rules”
It’s no fun when your side business loses money. However there is a bright side. You can generally use your losses to offset other income or apply the losses to lower your income taxes. But be careful. If you don’t handle things the right way, the IRS might: Invoke the “hobby loss rule” Claim that you’re running your side business as a hobby Prohibit you from deducting … [Read more...]
What you need to know about depreciation now!
When it comes to depreciation and Section 179 deductions, what Uncle Sam giveth, Uncle Sam taketh away. You see, the tax law grants you some nice depreciation deductions, but then recaptures or otherwise taxes them. This means you need to do some careful tax planning in order to save money. How should you start? By reading my brand new article titled Tax Tips: Depreciation … [Read more...]
How to slash your tax bill when you sell your home
Thinking about selling your current home or vacation property any time soon? Then my new article is for you! You see, I’ll explain easy steps you can take right now to prepare for (or completely avoid!) the tax hit you may have to take when you sell. For example, I’ll explain why you should never rely on the home-sale gain-exclusion to shield all of your profit. And I’ll … [Read more...]