Vehicle-Expense Deduction Ins and Outs for Individual Taxpayers
In addition to businesses being able to deduct vehicle-related expenses, individuals also can deduct them in certain circumstances. Unfortunately, the Tax Cuts and Jobs Act (TCJA) might reduce your deduction compared to what you were able to claim on your 2017 return. For 2017, miles driven for business, moving, medical and charitable purposes were potentially deductible. For 2018 through 2025, business and moving miles are deductible only in much more limited circumstances. TCJA changes could also affect your tax benefit from medical and charitable miles. Current limits vs. 2017 Before...
Read MoreWill Leasing Equipment or Buying It Be More Tax Efficient for Your Business?
Your decision as to whether you should lease or buy equipment (or other fixed assets) could be affected by recent changes to federal tax laws and accounting rules. Although there’s no universal “right” choice, many businesses that formerly leased assets are now deciding to buy them. Pros and cons of leasing Leasing can be more attractive than buying from a cash flow perspective. And leasing does provide some tax benefits because lease payments generally are tax deductible as “ordinary and necessary” business expenses. (Annual deduction limits may apply.) Leasing used to be advantageous from...
Read MoreCareful Tax Planning Required for Incentive Stock Options
Incentive stock options (ISOs) are a popular form of compensation for executives and other employees of corporations. ISOs allow you to buy company stock in the future at a fixed price equal to or greater than the stock’s fair market value on the ISO grant date. If the stock appreciates, you can buy shares at a price below what they’re then trading for. But because of the complex rules that apply careful tax planning is required. Tax advantages abound Although ISOs must comply with many rules, they receive tax-favored treatment. You owe no tax when ISOs are granted. You also owe no regular...
Read MoreBeware the Ides of March — If You Own a Pass-Through Entity
In addition to Julius Caesar Shakespeare’s words also apply to calendar-year partnerships, S corporations and limited liability companies (LLCs) treated as partnerships or S corporations for tax purposes. Why? The Ides of March, more commonly known as March 15, is the federal income tax filing deadline for these “pass-through” entities. Not-so-ancient history Until the 2016 tax year, the filing deadline for partnerships was the same as that for individual taxpayers: April 15 (or the first business day after if April 15 fell on a weekend or holiday). One of the primary reasons for moving up...
Read MoreThe Home Office Deduction: Actual Expenses vs. the Simplified Method
If you run your business from your home or perform certain functions at home that are related to your business, you might be able to claim a home office deduction against your business income on your 2018 income tax return. Now there are two methods for claiming this deduction: the actual expenses method and the simplified method. Basics of the deduction Generally, you can qualify for a home office deduction if part of your home is used “regularly and exclusively” as your principal place of business. If your home isn’t your principal place of business, you may still be able to deduct home...
Read MoreSome of Your Deductions May Be Smaller (or Nonexistent) When You File Your 2018 Tax Return
While the Tax Cuts and Jobs Act (TCJA) expands some tax breaks and reduces most income tax rates, it also limits or eliminates several itemized deductions that have been valuable to many individual taxpayers. Here are five common deductions you may see shrink or disappear when you file your 2018 income tax return: 1. State and local tax deduction. For 2018 through 2025, your total itemized deduction for all state and local taxes combined (including property taxes) is limited to $10,000 ($5,000 if you’re married and filing separately). You still must choose between deducting income and sales...
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