Every year the IRS mails letters or notices to taxpayers for many different reasons. Here are some do’s and don’ts for taxpayers who receive one: Don’t ignore it. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do. Don’t panic. The IRS and its authorized private collection agencies do send letters by mail. Most of the time, all the taxpayer needs to do is read the letter...

Whether you claim a business office in the home or are simply working at home, say because of COVID-19, you likely have some former personal assets that you now use for business. Ah, new tax deductions! Yep. Say you don’t claim a home-office deduction but now you are working at home and sitting in the fancy chair you inherited from your grandmother. Let’s say you use the fancy chair 85 percent for business purposes. Can you depreciate 85 percent of that chair? Yes. Let’s say that...

WASHINGTON — The Internal Revenue Service today issued proposed regulations updating various tax accounting regulations to adopt the simplified tax accounting rules for small businesses under the Tax Cuts and Jobs Act (TCJA). For tax years beginning in 2019 and 2020, these simplified tax accounting rules apply for taxpayers having inflation-adjusted average annual gross receipts of $26 million or less (known as the gross receipts test). Taxpayers classified as tax shelters cannot use...

Question I’m a majority owner in a partnership. I know the CARES Act allows me to defer part of my tax year 2020 self-employment tax. Do I have to do this? I’d rather pay the tax now. Answer We believe this provision is completely optional, as we explain below. Deferral Provision In Smart Selections from the COVID-19 Tax Relief Buffet, we explain this provision. For self-employment income incurred between March 27, 2020, and December 31, 2020, you can defer payment of...

This month, as you might have noticed, we’ve taken a break from the way we traditionally send out our emails.  Instead of compiling lists and notes and trying to share news, I’ve decided to share some of the key frustrations I see across the desk in my office. Many of the things I’ve shared this month – actually, ALL of them – come from my observations of clients.   What bothers them, keeps them up at night, and what – sadly enough – sometimes causes their enterprises to...

Over the past few decades, federal taxes have generally trended lower.  That era may be coming to an end, especially for well-off individuals.  The major factor to consider is that our country might finally be forced to confront the issue of ongoing huge federal budget deficits—which have been made that much bigger by costly federal COVID-19 relief measures.  Can you protect what you currently possess from a possible oncoming federal estate and gift tax threat? Maybe. Before...

If you operate your business as a partnership or an S or C corporation, you face entity-specific Payroll Protection Program (PPP) loan forgiveness rules that apply to you as an owner-worker in the business. The rules that apply to you do not apply to the rank-and-file employee group. The government puts you, the owner-worker, in a separate “owner-employee” category to limit your business’s PPP benefits. There are four types of owner-employees: General partners in partnershipsS corporation...

This year HAS to be the strangest one on record for us.   Yes, it’s been the punch line in memes, multiple monologues from late night, and more than a few conversations nearly every day, but one trend we’re seeing that very few people are talking about is this: Americans have – broadly speaking – more cash on hand than they have had in a long time.   For some, it was overtime as “essential” employees, for many, it was stimulus checks combined with lower spending,...

It’s time to keep working on this month’s theme, that is, reopening in the post-pandemic economy.  But more importantly, reopening the business you truly enjoy rather than a business that is simply a job you happen to own.   No one can simply grow a company willy-nilly and expect to enjoy the trip.  Even when Hewlett and Packard opened the doors nearly a century ago, they did so with the goals of leadership and not merely ownership.   Yes, they were going to...

Here’s bad news—tax law allows you to deduct only some of the interest you pay on your debts. For example, you do not deduct interest paid on your personal credit cards. Similarly, you may not deduct interest paid on the loan used to buy your personal vehicle. But here’s good news—you likely aren’t deducting all the interest you can under the law. One often overlooked deduction is for investment interest. And, sometimes, you get this deduction above-the-line with no limits. Investment...