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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.

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 | Comments Off on Coverdell ESAs: The Tax-Advantaged Way to Fund Elementary and Secondary School Costs

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 | Comments Off on Choosing the Best Way to Reimburse Employee Travel Expenses

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 | Comments Off on Consider the Tax Consequences Before Making an Employee a Partner

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 | Comments Off on Donating a Vehicle Might Not Provide the Tax Deduction You Expect

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 | Comments Off on A “Back Door” Roth IRA Can Benefit Higher-Income Taxpayers

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 | Comments Off on Business Owners: When It Comes to IRS Audits, Be Prepared

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 | Comments Off on Real Estate Investor vs. Professional: Why It Matters

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

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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Operating Across State Lines Presents Tax Risks — or Possibly Rewards

Posted by on May 11, 2017 in Blog, General, Management, Tax Tips | Comments Off on Operating Across State Lines Presents Tax Risks — or Possibly Rewards

Operating Across State Lines Presents Tax Risks — or Possibly Rewards

With the ease and popularity of e-commerce, as well as the incredible efficiency of many supply chains, all sorts of companies are finding it easier than ever to widen their markets. Doing so has become so much more feasible that many businesses quickly find themselves crossing state lines. But there lies a risk in doing this: Operating in another state means possibly being subject to taxation in that state. The resulting liability can, in some cases, inhibit profitability. But sometimes it can produce tax savings. Do you have “nexus”?...

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Choosing Between a Calendar Tax Year and a Fiscal Tax Year

Posted by on May 4, 2017 in Blog, General, Management, Tax Tips | Comments Off on Choosing Between a Calendar Tax Year and a Fiscal Tax Year

Choosing Between a Calendar Tax Year and a Fiscal Tax Year

Many business owners use a calendar year as their company’s tax year. It’s intuitive and aligns with most owners’ personal returns, making it about as simple as anything involving taxes can be. But for some businesses, choosing a fiscal tax year can make more sense. What’s a fiscal tax year? A fiscal tax year consists of 12 consecutive months that don’t begin on January 1 or end on December 31 — for example, July 1 through June 30 of the following year. The year doesn’t necessarily need to end on the last day of a month. It might end on the...

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