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Adam’s Tax Accounting Service Blog

Note: Tax advice, articles, and content contained on this site are intended for informational and educational purposes only. They are not a substitute for professional advice. Tax matters are can be extremely complex and vary greatly for each individual or company. Please click here to read our complete disclosure and disclaimer for the information presented on this site.

Pay Attention to the Details When Selling Investments

Posted by on Jun 19, 2017 in Blog, General, Management, Tax Tips | 0 comments

Pay Attention to the Details When Selling Investments

The tax consequences of selling an investment, as well as your net return, can be affected by a variety of factors. You’re probably focused on factors such as how much you paid for the investment vs. how much you’re selling it for, whether you held the investment long-term (more than one year) and the tax rate that will apply. But there are additional details you should pay attention to. If you don’t, the tax consequences of a sale may be different from what you expect. Here are a few details to consider when selling an investment: Which...

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Dot the “I’s” and Cross the “T’s” on Loans Between Your Business and Its Owners

Posted by on Jun 15, 2017 in Blog, General, Management, Tax Tips | 0 comments

Dot the “I’s” and Cross the “T’s” on Loans Between Your Business and Its Owners

It’s common for closely held businesses to transfer money into and out of the company. This often takes place in the form of a loan. However, the IRS looks closely at such transactions: Are they truly loans, or actually compensation, distributions or contributions to equity? Loans to owners When an owner withdraws funds from the company, the transaction can be characterized as compensation, a distribution, or a loan. Loans aren’t taxable, but compensation is and distributions may be. If the company is a C corporation and the transaction is...

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Coverdell ESAs: The Tax-Advantaged Way to Fund Elementary and Secondary School Costs

Posted by on Jun 12, 2017 in Blog, General, Management, Tax Tips | 0 comments

Coverdell ESAs: The Tax-Advantaged Way to Fund Elementary and Secondary School Costs

With school letting out you might be focused on summer plans for your children (or grandchildren). But the end of the school year is also a good time to think about Coverdell Education Savings Accounts (ESAs) — especially if the children are in grade school or younger. One major advantage of ESAs over another popular education saving tool, the Section 529 plan, is that tax-free ESA distributions aren’t limited to college expenses; they also can fund elementary and secondary school costs. That means you can use ESA funds to pay for such...

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Choosing the Best Way to Reimburse Employee Travel Expenses

Posted by on Jun 8, 2017 in Blog, General, Management, Tax Tips | 0 comments

Choosing the Best Way to Reimburse Employee Travel Expenses

If you have employees that incur work-related travel expenses, you can better attract and retain the best talent by reimbursing these expenses. But to secure tax-advantaged treatment for your business and your employees, it’s critical to comply with IRS rules. Reasons to reimburse While unreimbursed work-related travel expenses generally are deductible on a taxpayer’s individual tax return (subject to a 50% limit for meals and entertainment) as a miscellaneous itemized deduction, many employees won’t be able to benefit from the deduction....

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Consider the Tax Consequences Before Making an Employee a Partner

Posted by on Jun 5, 2017 in Blog, General, Management, Tax Tips | 0 comments

Consider the Tax Consequences Before Making an Employee a Partner

In today’s competitive environment, offering your employees an equity interest in your business can be a powerful tool for attracting, retaining and motivating quality talent. However, if your business is organized as a partnership, there are some tax traps you need to watch out for. Once an employee becomes a partner, you generally can no longer treat him or her as an employee for tax and benefits purposes, which has significant tax implications. Employment taxes Employees pay half of the Social Security and Medicare taxes on their wages,...

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Donating a Vehicle Might Not Provide the Tax Deduction You Expect

Posted by on Jun 1, 2017 in Blog, General, Management, Tax Tips | 0 comments

Donating a Vehicle Might Not Provide the Tax Deduction You Expect

All charitable donations aren’t created equal. Some of them provide larger deductions than others. How much or even what you donate isn’t always what matters. How the charity uses your donation might also affect your deduction. Take vehicle donations, for example. If you donate your vehicle, the value of your deduction can vary greatly depending on what the charity does with it. Determining your deduction You can deduct the vehicle’s fair market value (FMV) if the charity: Uses the vehicle for a significant charitable purpose (such as...

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A “Back Door” Roth IRA Can Benefit Higher-Income Taxpayers

Posted by on May 30, 2017 in Blog, General, Management, Tax Tips | 0 comments

A “Back Door” Roth IRA Can Benefit Higher-Income Taxpayers

One of the potential downsides to tax-deferred saving through a traditional retirement plan is that you’ll have to pay taxes when you make withdrawals at retirement. Roth plans, on the other hand, allow tax-free distributions; the tradeoff is that contributions to these plans don’t reduce your current-year’s taxable income. Unfortunately, your employer might not offer a Roth 401(k) or another Roth option, and modified adjusted gross income (MAGI)-based phaseouts may reduce or eliminate your ability to contribute to a Roth IRA. Fortunately,...

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Business Owners: When It Comes to IRS Audits, Be Prepared

Posted by on May 25, 2017 in Blog, General, Management, Tax Tips | 0 comments

Business Owners: When It Comes to IRS Audits, Be Prepared

If you filed your 2016 income tax return in April, rather than filing for an extension, you may be wondering if it’s likely your business could be audited by the IRS based on your filing. Here’s what every business owner should know about the auditing process. Catching the IRS’s eye Many business audits occur randomly, but a variety of tax-return-related items are likely to raise red flags with the IRS and may lead to an audit. Here are a few examples: Significant inconsistencies between previous years’ filings and your most current filing,...

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Real Estate Investor vs. Professional: Why It Matters

Posted by on May 18, 2017 in Blog, General, Management, Tax Tips | 0 comments

Real Estate Investor vs. Professional: Why It Matters

Income and losses from investment real estate or rental property are passive by definition — unless you’re a real estate professional. Why does this matter? Passive income may be subject to the 3.8% net investment income tax (NIIT), and passive losses generally are deductible only against passive income, with the excess being carried forward. Of course the NIIT is part of the Affordable Care Act (ACA) and might be eliminated under ACA repeal and replace legislation or tax reform legislation. But if or when such legislation will be passed and...

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Want to Help Your Child (or Grandchild) Buy a Home? Don’t Wait!

Posted by on May 11, 2017 in Blog, General, Management, Tax Tips | 0 comments

Want to Help Your Child (or Grandchild) Buy a Home? Don’t Wait!

Mortgage interest rates are still at low levels, but are likely to increase as the Fed continues to raise rates. So if you’ve been thinking about helping your child — or grandchild — buy a home, consider acting soon. There also are some favorable tax factors that will help: 0% capital gains rate. If the child is in the 10% or 15% income tax bracket, instead of giving cash to help fund a down payment, consider giving long-term appreciated assets such as stock or mutual fund shares. The child can sell the assets without incurring any federal...

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