In honor of The Masters golf tournament this week, here is a tax tip that can save you a couple of strokes off your tax bill. It's the good old "Augusta Rule" (Section 280A(g) of the Internal Revenue Code) in honor of the residents of Augusta, Georgia who rent their homes to spectators visiting The Masters.
Great thing is you don't have to be in Augusta to take part in this tax break. You’ll also see residents of Super Bowl host cities, political convention sites, music festivals, and Olympic Games host cities take advantage of the rule. And many taxpayers who live in less exotic locations take advantage of the opportunity to rent out their vacation homes when they would otherwise sit empty.
However, this rule also opens the door to renting your home to your business, paying a reasonable deductible rent out of the business account, and then treating it as non-taxable income when it hits your personal account. You can rent your home for all sorts of purposes, including business meetings, employee events, and even a limited amount of employee entertainment.
The key to making this work is to document your bona fide use of the home, and show that the rent you charge is reasonable. Need help feel free to contact us.
The dog days of summer are in full swing and that typically means spending relaxing hours by the pool with friends and family, not thinking about the stresses of running your business. Before you know it though, those relaxing days by the pool will come to an end and it will be back to business.
There are a number of ways you can turn some of that summertime fun into immediate tax savings for your business and family. Here are a few:
These are just a few ways that you can turn your summertime activities into immediate tax savings. Have questions about how; feel free to contact us for time is running out.
Just like a sun tanner that stays out in the sun too long, you can get burned if you don't put a tax plan together soon.
If you’re like most small business owners (SBO's), you qualify for all sorts of valuable tax credits and deductions, not to mention additional strategies that could lower your tax bill. But if you (or your tax professional) aren’t looking out for them, you may be losing your share.
Now that tax season is over, you should review your tax return for the following:
Do I feel that I paid too much tax (or refund was too small)?
Did my small business take all the legal credits and deductions this year?
What strategies can I use to lower my tax in the future?
Many small business owners (SBO's) think that now that tax season is over they can tuck those tax returns away and get back to the more exciting, less stressful tasks in their businesses. Don't put away those tax returns just yet (especially if you feel you paid more tax than you should have). After tax season is a great time to review your tax returns for potential tax savings that you can implement right now. Most SBO's don't realize that every action they take in their business during the year has a real effect on their bottom line.
Some of the many deductions and credits a SBO may qualify for include:
These are just a few of the questions SBO's should be asking in the "off" season to ensure that they keep more of their hard earned dollars. Feel free to contact us regarding your assets, health care, or entity selection changes you would like to make before year end. The clock is ticking...
Recently the IRS Commissioner sent an email warning his employees of the budget cuts and how they would play out for taxpayers this tax season. Many taxpayers may not know that Congress cut about $346 million from the IRS budget.
Here are four areas where the cuts will affect taxpayers:
1. Delays to critical IT investments of more than $200 million. Impact: This will hurt taxpayer service and cost-efficiency efforts as well as reduce outside contractor support for critical projects.
o This means that new taxpayer protections against identity theft will be delayed.
o The Taxpayer Advocate Service won't be able to obtain a new case management system to oversee taxpayer hardship cases.
o Aging IT systems will not be replaced, increasing the risk of downtime that affects taxpayer service and your ability to work effectively.
o We will not be able to invest upfront money to gain future operational savings, such as moving to a shared cloud infrastructure and reducing data center space.
2. Enforcement cuts of more than $160 million. Impact:
o Fewer audit and collection cases. Reduced staffing in enforcement will result in at least 46,000 fewer individual and business audit closures and more than 280,000 fewer Automated Collection System and Field Collection case closures
o As a result of the hiring freeze, we will lose about 1,800 enforcement personnel through attrition during FY 2015.
o The reduced enforcement staffing for just FY 2015 means the government will lose at least $2 billion in revenue that otherwise would have been collected.
3. Cuts in overtime and temporary staff hours by more than $180 million. Impact:
o Delays in refunds for some taxpayers. People who file paper tax returns could wait an extra week - or possibly longer - to see their refund. Taxpayers with errors or questions on their returns that require additional manual review will also face delays.
o Increasing correspondence inventories. We realize there will be growing inventories in Accounts Management, and taxpayer correspondence will face lengthy delays.
o Taxpayer service diminished further over the phone and in person. We now anticipate an even lower level of telephone service than before, which raises the real possibility that fewer than half of taxpayers trying to call us will actually reach us. During Fiscal Year 2014, 64 percent were able to get through. Those who do reach us will face extended wait times that are unacceptable to all of us.
4. Extending the hiring freeze through FY 2015. Impact:
As a result of the hiring freeze and assuming normal attrition rates, we expect to lose between 3,000 and 4,000 additional full-time employees. The total reduction in full-time staffing between FY 2010 and FY 2015 is expected to be between 16,000 and 17,000.
These cuts coupled with the increase in tax laws (and possibly tax increases) due to the ACA, will make for a memorable tax season for sure.
Happy New Year! With the holiday season in the rearview mirror, it is now time for the most wonderful time of the year - Tax Season. With the New Year still "new", now is the time to start thinking about not only tax preparation, but also tax planning. To do that, let's take a look at some past tax years to bring us up to speed. 2013 was a big year for taxes. Congress passed legislation averting the so-called "fiscal cliff," and many of the "Obamacare" changes took effect. While few of us who watched the process would consider it Washington's finest hour, we at least had answers to many of the questions that had made proactive planning more difficult over the past few years.
What a difference a year makes! 2014 started off with partisan bickering, and ended with even more gridlock. It took Congress until December 16 to pass "tax extender" legislation, reinstating tax breaks that expired all the way back on January 1. (Those same provisions expire on January 1, 2015 -- meaning Congress will have to do it all over again next year!) About the only thing they could actually agree on was cutting the IRS budget back to pre-2009 levels, which will only make the taxation bureaucracy even harder to navigate.
President Obama and Congressional leaders have said that corporate tax reform is "on the table" for the final two years of the current administration. However, amid the continuing partisan wrangling over the budget, and the approaching 2016 election, there appears to be little appetite on Capitol Hill for significant changes to the personal tax rules.
If you would like to get more information on the small business changes that will affect your tax situation, be sure to stop by our small business tax seminar on Jan. 20th. We will review what all the "tax extender" legislation has to do with your small business and more so that you can make proactive tax planning decisions now.
You know what Americans love even more than Thanksgiving? Leftovers! It has to be true, because we're all too busy standing in line outside Target to enjoy an actual Thanksgiving feast when it's hot out of the oven. But everyone appreciates a leftover turkey-and-stuffing sandwich when they get home after saving $50 on a 65 inch LED Smart TV.
Well now that Black Friday, and Shop Small Saturday are in the rearview mirror and Cyber Monday is upon us, those leftovers should be all gone (of course there is a half eaten leftover turkey club sandwich in the fridge). Many small business taxpayers have shifted their focus to closing out the year end and the continued spirit of giving. There are a few “IRS Leftovers” that many small business owners may want to focus on before December 31st.
• ACA (Obamacare) Guidance
• Updated 2015 Tax Figures
• Tax extenders uncertainty
We will be conducting end of the year tax seminars to address this any many other issues that affect small businesses and their employees.
Why is it important for small business owners to sit down and have a plan before December 31st?
Because tax planning is the single most effective way to save your hard earned dollars this year. I mean sure you can stand in line for hours on Thanksgiving missing time with your friends, family, and football to save $50 on “last year’s” technology or you can sit down with your tax professional, set up a defined benefit plan or many other tax strategies and save enough money to 4 new TV’s with the tax savings.
Without tax planning, you're probably going to spend a lot more on taxes this year than you have to. That however, does not have to be the case. We need to sit down and talk about it now, before the end of the year. Are you willing to risk another year pass by and waste a bunch of money on taxes you don't have to pay?
If procrastination were the Super Bowl, many small business owners (SBO's) would have multiple "Lombardi" trophies.
Time to put away those whites (unless you are Billy "White Shoes" Johnson) and pull out the ole playbook of late summer early fall tax planning ideas. Just like the start of the NFL football season brings teams a new playbook, SBO's need to update their tax strategy playbooks now to ensure that they will be ready for the tax planning season starting now.
Most SBO's can take a look at their previous season's record to give them an idea of how good their tax playbook was and where they need to be this year. If you have not "completed the 2013 tax season" yet, here are some of the more important "game" dates in the coming months where many SBO's can complete the 2013 tax season.
• September 15th - Tax extension deadline for C-Corps, S-Corps and Partnerships
• October 15th - Tax extension deadline for personal tax returns
• December 31st - Final day of tax planning for 2014 season
If you have completed the 2013 tax, great, but this is not the time to sit back on your laurels! Time is now to focus on new tax plays for the 2014 season. The tax league’s “Front Office” is making quite a few rule changes this year that may make it difficult for SBO’s to score many tax savings touchdowns (expiring tax provisions for SBO’s), but the basic rules are still in effect. Since the season is shorter than the NFL one, tax planning is key to saving your small business thousands. Using legal "black letter" tax strategies in your playbook will ensure you have a winning record this season.
Need help devising your tax strategy playbook, feel free to contact us.
Today begins the long extended Labor Day holiday weekend and many individuals have probably already taken the day away from "labor" and their auto-responders are doing all the "work" today.
For many small businesses however, they are more likely than not hard at work today servicing clients and supporting their employees that have taken the day off. The Labor Day holiday is a day to celebrate you...the small business owner.
Signed into law in 1894 by President Cleveland, Labor Day celebrates the American Labor movement, and you as the small business owner are an important part of that continued movement. Back then it was an industrial movement, but today it is more about innovation, and technology. Either way the small business owner will always have a place in the American economy.
So when you finally do get to take the day off and enjoy the barbecue, beach, and college football holiday weekend be sure to remember that it is YOUR efforts that we are celebrating.
Thanks for your efforts small business community. Have a safe Labor Day weekend.
There is a tax firm out there that can help their clients pay no income tax. This tax firm is comprised of a large work force that has access to all the necessary technology tools and tax information to ensure that their clients use all the legal loopholes to bring their tax liability to zero and many times a surplus. This tax firm is so good at saving their clients tax dollars that major accounting firms even loan their employees to them!
Sounds like a great accounting right? Only one problem this accounting firm has one client...and that client is GE.
GE's Tax department is one of the most prestigious tax firms in the country. A quick Google search of "GE Tax Department" shows the efforts that GE goes through to pay no taxes.
Most small business owners don't have the resources and time to research the tax strategies like their "Big Boy" counterparts. They then go about taxes much the same way most personal taxpayers do, taking the last minute "SALY" approach. Learn more about "SALY" here.
Approaching taxes as a routine is ok, if your routine is done on a consistent basis. But even a consistent routine has small changes. Take your morning routine for instance. You may get up at the same time every day, but is the same song playing when you wake, or do you have the same breakfast every morning? The same goes for your tax planning routine. There is a consistent guide that you follow, but you must always monitor for the changes. This includes staying up to date on tax changes, and how they affect your business decisions during the year.
There are quite a few tax issues affecting small businesses currently. From the changes in depreciation, and deduction rules to healthcare now is the time to take advantage of tax strategies for main street businesses like yours.
It's doesn't take having a large tax firm as your tax department to save your hard earned money, but it does take some work (with a little help from a tax expert friend like us :-).
So do like "Nike" the Goddess of motivation/implementation and "just do it".
The ides of August are not even upon us, but as I look out the window this morning I can see the kids begrudgingly congregate at the bus stop and make their ways to the local learning institutions. Yes my friends, summer is in the rearview mirror and school is back in session. If you have kids, you’ve probably already met the teachers. You may have even received a list of the tools your kids will need to make their learning experience a success.
It’s probably been a long time since you’ve sat in a classroom yourself. But school is never out if you are looking to make the most of your money in today’s challenging economy. Saving your hard earned tax dollars is one important way to make the most out of your money in this economy.
What classes would you take to keep more of your income in your pocket? We have come up with a list for parents to review for the upcoming tax season. Try these:
· Math 1040: Where are tax rates headed?
· History 2013: Lessons from last year’s mistakes?
· Social Studies 463: Write off meals and entertainment
· Chemistry 162: Introduction to a “secret formula” for paying less tax?
· Anatomy 213: What’s the best strategy for healthcare benefits?
If you want to keep the most of what you make, you can’t wait ‘til finals for answers. You need to study now. Putting tax-wise ideas and strategies in place today could help avoid an ugly surprise when “Report Cards” come due April 15!
Get a jump-start on the new tax planning semester and contact us. We’ll find the mistakes and missed opportunities that may be costing you thousands today, and show you how “back to school” tax planning can save thousands more tomorrow. We guarantee you’ll leave with valuable new lessons and tax savings to put your kid’s new school clothes money back in your pocket.