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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.

Keep an Eye Out for Extenders Legislation

Posted by on Aug 20, 2018 in Blog, General, Management, Tax Tips | Comments Off on Keep an Eye Out for Extenders Legislation

Keep an Eye Out for Extenders Legislation

The tax legislation getting the most attention these days is the Tax Cuts and Jobs Act (TCJA) signed into law last December, as well as the possible “Tax Reform 2.0” that Congress might pass this fall. But for certain individual taxpayers, what happens with “extenders” legislation is also important. Recent history In December of 2015, Congress passed the PATH Act, which made a multitude of tax breaks permanent. However, there were a few valuable breaks for individuals that it extended only through 2016. The TCJA didn’t address these breaks,...

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Choosing the Right Accounting Method for Tax Purposes

Posted by on Aug 16, 2018 in Blog, General, Management, Tax Tips | Comments Off on Choosing the Right Accounting Method for Tax Purposes

Choosing the Right Accounting Method for Tax Purposes

The Tax Cuts and Jobs Act (TCJA) liberalized the eligibility rules for using the cash method of accounting, making this method — which is simpler than the accrual method — available to more businesses. Now the IRS has provided procedures small business taxpayers can use to obtain automatic consent to change their method of accounting under the TCJA. It pays to consider whether switching methods would be beneficial to you if you have the option to use either accounting method. Cash vs. accrual Generally, cash-basis businesses recognize income...

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The TCJA Prohibits Undoing 2018 Roth IRA Conversions, But 2017 Conversions Are Still Eligible

Posted by on Aug 13, 2018 in Blog, General, Management, Tax Tips | Comments Off on The TCJA Prohibits Undoing 2018 Roth IRA Conversions, But 2017 Conversions Are Still Eligible

The TCJA Prohibits Undoing 2018 Roth IRA Conversions, But 2017 Conversions Are Still Eligible

Converting a traditional IRA to a Roth IRA can provide you with tax-free growth and tax-free withdrawals in retirement. But what if you convert your traditional IRA — subject to income taxes on all earnings and deductible contributions — and then discover you would have been better off if you hadn’t converted it? Before the Tax Cuts and Jobs Act (TCJA), you could undo a Roth IRA conversion using a “recharacterization.” Effective with 2018 conversions, the TCJA permanently prohibits recharacterizations. But you may still be able to undo a...

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Do You Still Need to Worry About the AMT?

Posted by on Aug 9, 2018 in Blog, General, Management, Tax Tips | Comments Off on Do You Still Need to Worry About the AMT?

Do You Still Need to Worry About the AMT?

There was talk of repealing the individual alternative minimum tax (AMT) as part of last year’s tax reform legislation. However, the repeal wasn’t included in the final version of the Tax Cuts and Jobs Act (TCJA), but the TCJA will reduce the number of taxpayers who are subject to the AMT. Now is a good time to familiarize yourself with the changes, assess your AMT risk, and see if there are any steps you can take during the last several months of the year to avoid the AMT, or at least minimize any negative impact. AMT vs. regular tax The top...

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Do You Qualify for the Home Office Deduction?

Posted by on Aug 6, 2018 in Blog, General, Management, Tax Tips | Comments Off on Do You Qualify for the Home Office Deduction?

Do You Qualify for the Home Office Deduction?

Under the Tax Cuts and Jobs Act (TCJA), employees can no longer claim the home office deduction. However, if you run a business from your home or are otherwise self-employed and use part of your home for business purposes, the home office deduction may still be available to you. Home-related expenses Homeowners can claim itemized deductions for property tax and mortgage interest on their principal residences, subject to certain limits. Most other home-related expenses, such as utilities, insurance and repairs, aren’t deductible. But if you...

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Why the “Kiddie Tax” Is More Dangerous Than Ever

Posted by on Aug 2, 2018 in Blog, General, Management, Tax Tips | Comments Off on Why the “Kiddie Tax” Is More Dangerous Than Ever

Why the “Kiddie Tax” Is More Dangerous Than Ever

Once upon a time, some parents and grandparents would attempt to save tax by putting investments in the names of their young children or grandchildren in lower income tax brackets. In order to discourage such strategies, Congress created the “kiddie” tax in 1986. Since then, this tax has gradually become more far-reaching. Now, under the Tax Cuts and Jobs Act (TCJA), the kiddie tax has become more dangerous than ever. A short history Years ago, the kiddie tax applied only to children under age 14 — which still provided families with ample...

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Business Deductions for Meal, Vehicle and Travel Expenses: Document, Document, Document

Posted by on Jul 30, 2018 in Blog, General, Management, Tax Tips | Comments Off on Business Deductions for Meal, Vehicle and Travel Expenses: Document, Document, Document

Business Deductions for Meal, Vehicle and Travel Expenses: Document, Document, Document

Meal, vehicle and travel expenses are common deductions for businesses. But if you don’t document these expenses properly, you could find your deductions denied by the IRS. A critical requirement Subject to various rules and limits, business meal (generally 50%), vehicle and travel expenses may be deductible, whether you pay for the expenses directly or reimburse employees for them. Deductibility depends on a variety of factors, but generally the expenses must be “ordinary and necessary” and directly related to the business. However, proper...

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What You Can Deduct When Volunteering

Posted by on Jul 26, 2018 in Blog, General, Management, Tax Tips | Comments Off on What You Can Deduct When Volunteering

What You Can Deduct When Volunteering

Because cash or property donations to charity generally are tax deductible (if you itemize), it only seems logical that the donation of something even more valuable to you — your time — would also be deductible. Unfortunately, that’s not the case. Donations of time or services aren’t deductible. It doesn’t matter if it’s simple administrative work, such as checking in attendees at a fundraising event, or if it’s work requiring significant experience and expertise that would be much more costly to the charity if it had to pay for it, such as...

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How to Avoid Getting Hit With Payroll Tax Penalties

Posted by on Jul 23, 2018 in Blog, General, Management, Tax Tips | Comments Off on How to Avoid Getting Hit With Payroll Tax Penalties

How to Avoid Getting Hit With Payroll Tax Penalties

Managing payroll can be one of the most arduous tasks for small businesses. Adjusting income tax withholding based on the new tables issued by the IRS earlier this year added to that burden. (Those tables account for changes under the Tax Cuts and Jobs Act.) But it’s crucial not only to withhold the appropriate taxes — including both income tax and employment taxes — but also to remit them on time to the federal government. If you don’t, you, personally, could face harsh penalties. This is true even if your business is an entity that normally...

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Close-Up On the New QBI Deduction’s Wage Limit

Posted by on Jul 19, 2018 in Blog, General, Management, Tax Tips | Comments Off on Close-Up On the New QBI Deduction’s Wage Limit

Close-Up On the New QBI Deduction’s Wage Limit

The Tax Cuts and Jobs Act (TCJA) provides a valuable new tax break to non-corporate owners of pass-through entities: a deduction for a portion of qualified business income (QBI). This deduction generally applies to income from sole proprietorships, partnerships, S corporations and, typically, limited liability companies (LLCs). It can equal as much as 20% of QBI. But once taxable income exceeds $315,000 for married couples filing jointly (or $157,500 for other filers) a wage limit begins to phase in. Full vs. partial phase-in When the wage...

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