Partnerships vs Other Business Relationships
Picking the right type of structural organization for your business can have important tax consequences, so it’s important to take a close look at partnerships and the other types of business relationships.
A partnership is created when persons join together with the intent to conduct unincorporated venture and share profits. Intent is […]
Child Related Deductions and Tax Credits
We all love kids, but we know they can also be really expensive. As a general rule, personal expenditures are not deductible. However, there are several deductions and credits that help defray some of the costs associated with raising children, including some costs related to education. Some of the most […]
Independent Contractor or Employee?
The IRS remains focused on the misclassification of workers as independent contractors rather than employees. The IRS issued yet another fact sheet “reminding” employers about the importance of correctly classifying workers for purposes of federal employment taxes. Generally, employers must withhold income taxes, withhold and pay social security and Medicare taxes, and […]
Timing Stock Sales for Tax Advantage
A recent Tax Court decision has highlighted how stock sales can be timed for maximum tax advantage. The taxpayer in the case failed to convince the Tax Court that he timely made an election with his broker to use the last-in-first-out (LIFO) method to set his cost-per-share cost basis for […]
Best Ways to Deduct Student Loan Interest
An eligible taxpayer can deduct qualified interest on a qualified student loan for an eligible student’s qualified educational expenses at an eligible institution. The amount of the deduction is limited, and it is phased out for taxpayers whose modified adjusted gross income (AGI) exceeds certain thresholds.
The maximum deduction allowed […]
Updated 401K Hardship Guidelines
The IRS Tax Exempt and Government Entities Division has updated their guidelines to determine whether a 401K plan hardship meets the safe-harbor standards set forth in applicable regulations. Specifically, they have set out the substantiation guidelines that IRS auditors are to use in conducting related examinations.
Under Code Sec. 401(k), plans may provide […]
Limits on Passive Activity Losses
It might seem strange for someone to invest money in a business designed to lose money. However, this used to happen all the time because money-losing businesses could provide wealthy taxpayers with valuable tax benefits.
Many people invested in real estate limited partnerships and other tax shelters created solely to generate large […]
Is That Business Meal Tax Deductible?
Many businesses consider the occasional wining and dining of customers and clients just to stay in touch with them to be a necessary cost of doing business. The same goes for taking business associates or even employees out to lunch once in a while after an especially tough assignment has […]
Tips vs Service Charge For Tax Purposes
Although the employee may end up with the same amount whether something is designated a tip or a service charge, the IRS reporting requirements for the employer do differ. Basically, any amount required to be paid by a customer rather than at the customer’s discretion is considered a service […]
The Odds of Getting Audited
Audit coverage rates are at low levels according to the IRS. The audit coverage rate for individuals fell 16 percent from FY 2015 to FY 2016. The 0.7 percent audit coverage rate for individuals was the lowest coverage rate in more than a decade.
Selection Process
The raw audit numbers, of course, do […]