Some withdrawals are taxable. Even worse, some can be socked with a 10 percent early withdrawal penalty tax, and this can happen even when there’s no income tax hit. Any withdrawals from any of your Roth accounts are federal-income-tax-free qualified withdrawals if you, as a Roth IRA owner, are age 59 1/2 or older, andhave had at least one Roth IRA open for over five years. Such withdrawals are usually state-income-tax-free too. Good! You must pass both the age and the five-year...

Are you thinking about buying personal property (such as a car, a computer, or other equipment) or real property (such as a building)? If you use the property for personal purposes, it’s not deductible. But if you use it in a business, you can deduct the full cost using regular depreciation, bonus depreciation, or IRC Section 179 expensing. Regular depreciation takes three to 39 years depending on the property involved, while bonus deprecation allows you to deduct 100 percent of the...

As a business owner, you are in partnership with the IRS, like it or not. You share your net profits with the IRS according to your partnership agreement (known to you as the Internal Revenue Code). To make sure you are sharing fairly, the IRS can audit your tax return. You have to hate the idea of an IRS audit. But your big audit worry is not about the potential bills for unpaid taxes, interest, and penalties. No, your big worry is the additional time the audit will take. Tax audits...

Now that most of us have made it through tax season, let me ask you a question: Are you tired of the stress?  I mean, some of it you’ll never get rid of – it’s just the nature of the beast for us as business owners.  In this instance, I’m talking about the stress that taxes and tax season brings on many business owners. First of all, it doesn’t have to be that way, and I can show you how to quit freaking out every Spring and how “taxes” don’t have to stress you out.  In...

If you buy a property, fix it up, and then sell it, is that property a dealer or an investor property? Here are five thoughts on this: 1.) Periodically buying property, fixing it up, and selling it makes it look like dealer property. But when you seldom do this, the property can look like investor property. 2.) If you hold the property for more than a year from the time of purchase to the close of escrow, investor status gives you tax-favored, long-term capital gains treatment. 3.)...

Here’s a sad story of a dentist who did not file his tax returns.  Of course, as you know, the failure to file tax returns often gets the IRS’s attention. In this case, it did, and this dentist suffered accordingly. The IRS used the 1099s issued to this dentist by insurance companies and some of the insurance company checks he cashed to identify $43,886 in taxes due, a $10,072 penalty for failure to file, and a $1,754 penalty for failure to pay estimated taxes. What made this dentist...

In what clearly must be a mistake, the IRS issued Notice 2021-49 to deny the employee retention credit (ERC) on the wages paid to most C and S corporation owners. According to the IRS: Your corporation can qualify for the ERC on the wages paid to a more than 50 percent owner of an S or C corporation if that owner does not have any living brothers and sisters (whether whole- or half-blood), spouse, ancestors, or lineal descendants.Your corporation cannot qualify for the ERC on the more than 50...

It’s hard to imagine that a small business does not qualify for some or all of the employee retention credit (ERC). And remember, this is a tax credit—one of the very best things that tax law has to offer. True, it’s not as valuable as some other tax credits, because you have to reduce your payroll income tax deductions for the credits, but the ERC certainly puts you money ahead. And you can be looking at big bucks. The possible ERC is $5,000 per employee for 2020 and $28,000 per employee for...

Here’s something to know about cryptocurrencies. Because cryptocurrencies are classified as “property” rather than as securities, the wash-sale rule does not apply if you sell a cryptocurrency holding for a loss and acquire the same cryptocurrency before or after the loss sale.  You just have a garden-variety short-term or long-term capital loss depending on your holding period. No wash-sale rule worries.  This favorable federal income tax treatment is consistent with the long-standing treatment...

2021 has been an extremely strange year, and with every passing day, there’s no end of just how odd things seem to be these days.   …But that’s not an excuse.  In fact, it’s a great opportunity for you.   No matter what you do – your job, your career, your family situation – you have the chance to make 2021 a great year.  After all, what’s holding you back?   You might be deeply in debt, or out of work (or the newest employee on the job), or struggling...