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Section 199A Rental Property Deduction
By Jason Watson (Google+) Posted January 17, 2019 Defining a trade or business is easy for the most part, however certain activities are murky and one of them is rental properties. On one hand an argument that rental property income is already tax advantaged can be made since it is not subject...
06 Apr, 2019 Views: 0 Comments: 0
Deducting Business Meals
By Jason Watson (Google+) Posted November 23, 2018 We chatted about business meals earlier in the chapter. The Tax Cuts and Jobs Act of 2017 (TCJA) redefined meals and entertainment. In a nutshell, entertainment was removed as a deduction and meals were left in limbo (bad law writing). As such,...
19 Feb, 2019 Views: 0 Comments: 0
How do I qualify for the foreign earned income exclusion?
By Jason Watson (Google+) There are several small hoops, pitfalls, and gotchas that you need to be careful with, but the big requirements are- 1. Your tax home must be in a foreign country, and your abode can be anywhere except the United States. These terms are different, the definitions are...
18 Feb, 2019 Views: 0 Comments: 0
Health Care Summary
By Jason Watson (Google+) Posted September 2, 2014 Health care options within your small business are challenging. Expensive. Convoluted. What worked today might be wrong tomorrow. All kinds of stuff. Section 105? 125? HSA? High-Deductible Plans? Reimbursing for health insurance? Hopefully...
18 Feb, 2019 Views: 0 Comments: 0
Rentals Owned by an LLC Fallacy
By Jason Watson (Google+) Updated September 2, 2014 Should you put a rental in an LLC? Sure. Why not? Everyone else does. The real answer is Perhaps. There are several myths out there regarding the use of an LLC as a shelter from potential lawsuits and litigation, but most concerns stem from...
18 Feb, 2019 Views: 0 Comments: 0
Disclosure and Updates
By Jason Watson (Google+) Posted September 2, 2014 There is no way around this. As you already know the Affordable Care Act has turned things upside down and inside out. Some things remain the same, some things have changed, and some things have yet to change. There are third-party...
18 Feb, 2019 Views: 0 Comments: 0
Do rental properties offer good tax sheltering?
By Jason Watson (Google+) Perhaps. There are two issues- passive loss limitations and future income tax rates, and we’ve divided this general question into three questions and three answers- Part 1 - Do rental properties offer good tax sheltering? Part 2 - How do passive loss limitations...
18 Feb, 2019 Views: 0 Comments: 0
W-2 or 1099-MISC That Is The Question
By Jason Watson (Google+) Posted September 15, 2014 Many people are finding themselves in a quandary between being a W-2 employee of a company or working for that same company in a contractor relationship. As a quick aside, the IRS and more importantly local state governments are going after...
18 Feb, 2019 Views: 0 Comments: 0
Estimated Tax Payments, Withholdings Issues for an S-Corp
By Jason Watson (Google+) Posted September 2, 2014 This KB article has been re-written. Please use this link- https://www.watsoncpagroup.com/kb/Estimated-Tax-Payments-Withholdings-Issues_309.html Thanks! Estimated tax payments change as well when you have an S-Corp, especially the first...
18 Feb, 2019 Views: 0 Comments: 0
How do passive loss limitations affect me?
By Jason Watson (Google+) This is the second question and answer of a three-part series. Part 1 - Do rental properties offer good tax sheltering? Part 2 - How do passive loss limitations affect me? Part 3 - Is depreciating my rental a good thing? In our first part, we discussed the...
18 Feb, 2019 Views: 0 Comments: 0
Is there a way to avoid Self-Employment tax?
By Jason Watson (Google+) Posted February 2, 2016 This KB article on self-employment taxes and S-Corp elections has been updated, and we have re-released our SubS.pdf tax article. Here are the links to get you started- Comprehensive Guide to S-Corps in PDF (updated Fall of 2015) Updated KB...
14 Feb, 2019 Views: 0 Comments: 0
What are some of the tax court cases for real estate professionals?
By Jason Watson (Google+) Here is a snapshot of some issues the Tax Court has recently dealt with. TC Summary 2012-94 (Wallach) Taxpayer was a real estate agent who attempted to deduct several travel expenses including Hawaii and Lake Tahoe. He attempted to claim the travel was for...
14 Feb, 2019 Views: 0 Comments: 0
What IRS publications deal with audits?
By Jason Watson (Google+) Here are the publications that deal with audits (examinations), appeals and payment options: Pub No. Title 1 Taxpayer Rights 3498 Examination Process 3498a Examination Process (By Mail) 556 Examination of Returns, Appeal...
14 Feb, 2019 Views: 0 Comments: 0
Section 199A Frequently Asked Questions
By Jason Watson (Google+) Posted January 18, 2019 Here are some common questions and answers that have come up during recent consultations with clients. Some of these might be repetitive if you’ve been paying attention. Do I have to create an LLC to get the Section 199A deduction? No. It is...
18 Jan, 2019 Views: 0 Comments: 0
Quarterly S Corp Payroll
By Jason Watson (Google+) Posted January 17, 2019 Throughout this book we make reference to running payroll quarterly. Before we discuss the reasons why, if you have a staff where payroll is ran every two weeks the quarterly S Corp payroll concept might still apply so please keep reading. The...
17 Jan, 2019 Views: 0 Comments: 0
Section 199A Pass-Thru Salary Optimization
By Jason Watson (Google+) Posted January 17, 2019 Speaking of W-2s, there is some optimization that is necessary for a small business owner to get the most from the Section 199A deduction. On one hand we want to reduce W-2 salaries to shareholders to minimize self-employment taxes. This was...
17 Jan, 2019 Views: 0 Comments: 0
California Multi-Member LLC S Corp Twist
By Jason Watson (Google+) Posted November 23, 2018 Sounds like a dance move doesn’t? “Oh man, I hurt myself doing the Cali S Corp twist.” “Are you gonna need surgery?” The problem with the previous MMLLC that issues invoices entity structure, is that this works well in most...
17 Jan, 2019 Views: 0 Comments: 0
Parent-Child Arrangement (Income Flows “Up”)
By Jason Watson (Google+) Posted November 23, 2018 You might have two business entities, and you want to combine them but they are also very different. For example, you are a realtor and your spouse is an IT consultant. We could create a holding LLC called Smith Ventures which owns the realtor...
17 Jan, 2019 Views: 0 Comments: 0
Multi-Member LLC That Issues Invoices
By Jason Watson (Google+) Posted January 17, 2019 A simpler way to accomplish the same thing as above is to create three entities again, but the multi-member LLC is owned by you and the other guy, not the S corporations. The S Corps then issue consultation invoices to the multi-member LLC in the...
17 Jan, 2019 Views: 0 Comments: 0
Parent-Child Arrangement (Income Flows “Down”)
By Jason Watson (Google+) Posted January 17, 2019 Another thought along these lines involves a multi-member LLC where you and another non-spouse partner are the members. Later in a later chapter you’ll learn that one of the limitations of an S corporation is that distributions must be made in...
17 Jan, 2019 Views: 0 Comments: 0
Automobile Decision Tree
By Jason Watson (Google+) Posted November 23, 2018 In deciding whether to own the automobile personally or through your S corporation, here is a set of examples to help you make a decision. It is not a hard and fast set of rules, but will provide some guidance. First, let’s establish the...
06 Dec, 2018 Views: 0 Comments: 0
Section 199A W-2 Safe Harbors
By Jason Watson (Google+) Posted November 23, 2018 This is one of the dorky accountant questions… which number on the W-2 do I use? The IRS defined three safe harbors for the use of Section 199 Domestic Production deduction back when that was a thing. Later, in IRS Notice 2018-64 released...
26 Nov, 2018 Views: 0 Comments: 0
You Own the Automobile, Lease Back to Your Company
By Jason Watson (Google+) Posted November 23, 2018 This might take a bit of getting used to so we will start with a similar situation. If you owned and operated a landscaping company, you might own the heavy equipment personally, and lease it back to the company. This is very common, and is...
25 Nov, 2018 Views: 0 Comments: 0
You Own the Automobile, Take Mileage Deduction
By Jason Watson (Google+) Posted November 23, 2018 This is dead. Thanks to the Tax Cuts and Jobs Act of 2017 all miscellaneous deductions that were once subjected to 2% adjusted gross income limits and then deducted on Schedule A are gone. Obtaining a tax deduction through a mileage deduction on...
25 Nov, 2018 Views: 0 Comments: 0
Section 199A Side by Side Comparisons
By Jason Watson (Google+) Posted November 23, 2018 We created a handful of examples on the follow pages with two intentions. One, to demonstrate how the Section 199A deduction is calculated and Two, to show that an S Corp remains a critical tax reduction vehicle. Brace yourself for nauseating...
25 Nov, 2018 Views: 0 Comments: 0