Jeff Haywood, CPA

Posts Tagged ‘Expenses’

Obamacare, number of employees, ownership groups, and potential workarounds

February 19th, 2013 | Author: admin

What If?

What if I form other businesses to keep my number of employees below 50 or 25 to get around Obamacare? If I start another related business with a different ownership group will the government look at these related but separate businesses as one? These are the million dollar questions of the day and here is deal, as of today.

There are many unknowns here and the people with some knowledge about it recognize that any loopholes in Obamacare could be addressed and closed by the government. So if you are wondering how your business can avoid the additional costs associated with this law you would need to take a very close look at any possible workarounds and the related costs and complexities they would add and the very real possibility that the regulations will be changed to close any perceived loophole(s). I do not see where anyone knows if the government would look at related business with similar but different ownership groups as one combined business for the sake of determining the number of employees as related to Obamacare . It seems the speculation is that the workforces could be combined for the purposes of the health care law. Repeat, could be, for emphasis that there are so many unknowns that we are dealing with here.

Here are some articles I looked at for my research and relevant highlights:

http://www.entrepreneur.com/article/225559

Relevant Quote:

‘On a recent webinar on Obamacare, for example, Bob Graboyes of the NFIB Research Foundation advised participants that entrepreneurs may not be able to avoid the large-employer fines by splitting their companies into smaller, separate businesses. Even an entrepreneur with completely separate companies may find his or her workforces combined for the purposes of the health law, he said.’

http://www.thepublicinsuranceoption.com/2011/reform/small-business-tax-regulations.html

Relevant Quote:

“This difference of opinion will set-up a court battle, and frankly, I wouldn’t bet against the government on this one. A better solution to the problem of keeping the total number of employees under the 25 employee threshold would be for a business of 90 employees to be split-up between 4 or more owners, but with each owning a ‘baby’ business individually, rather each of the 4 owners owning 25% of 4 different ‘baby’ businesses. I realize that will create a whole new set of problems, such as equitable division of the parent company, but I have faith in Americans’ ingenuity.”

Here is an article addressing what seems to be a work around. However, it is acknowledged in the article that regulations could change to close any loopholes.

http://www.huffingtonpost.com/2013/01/30/small-business-obamacare_n_2581653.html

Relevant Quote:

“We’re dealing with things that don’t exist but have the theoretical possibility of existing,” Christiansen adds. “Right now, we have as the default employer-employee relationships, but that whole paradigm is potentially problematic as we have more and more restrictions imposed by government.”

So the answer to your question is likely unknown and even if it is known or becomes known it is likely to change so be careful about decisions that lock you into added costs and complexity. My faithful readers know I value lifestyle choices that minimize complexity and stress. But that is just me. For you make sure you count the cost and know the existing and possible new risks moving forward. And that is all I have to say about that…for now.

Jeff Haywood, CPA
The CPA Superhero
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

I prepare the following types of tax returns:

Personal
Business
Estate/Gift
Trusts
Federal and State Returns

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

Posted in Business, Business Entities, Income Taxes, Success | Tags: Business, Costs, CPA, Entity, Entrepreneurs, Expenses, Health, Health Care, Health Insurance, Income, Insurance, IRS, Money, Obama, Obamacare, Payments, Profits, Questions, Success, Uncertainties | No Comments »

Talk to Your CPA Now to Plan Year End Moves and Prepare for 2013 Tax Changes

November 16th, 2012 | Author: admin

Plan Year End Moves

A recent meeting with one of my clients uncovered an opportunity to save them at least $12,000 in taxes on their 2012 income tax returns. The opportunities to save on your taxes are greatest this time of year. So if you really want to make the most of your CPA a conversation this time of year can save you much money. In the case of my client it was identifying the time to make an organizational change. For many however there are opportunities to reduce taxes at year-end by delaying income or by accelerating expenses or both.

You may have the ability to reduce the taxable income from your business by delaying billing or receiving of payments until next year. If you are a cash basis taxpayer you can bill customers/clients at the end of the of the year so they pay you next year. In addition you can make purchases that are expenses to your business before year-end. Now here is one that is quite nice…you can put an expense on your credit card before year-end and deduct it this year even if you do not pay the bill until next year. Just remember to pay the bill in a timely manner to avoid any interest charges and penalties. You may be able to significantly reduce your income for the year by purchasing major assets before year-end. When making these moves you want to be careful not to spend money just to save pennies on the dollar in taxes. After all it is about how much money you have in your pocket at the end right? I repeat DO NOT SPEND DOLLARS ONLY TO SAVE PENNIES ON YOUR TAXES. While you want to pay as little tax as possible, even more important should be maximizing your wealth which should lead to you paying some taxes. Paying taxes are a good thing, you just want to keep it to a minimum and this is a great time to make some moves to accomplish that end.

Prepare for 2013 Tax Changes

In addition to tax moves you also need to be actively looking at changing your budget for tax changes for 2013. Income tax rates are due to increase and payroll taxes are due to increase by 2% starting January 1, 2013. Take a look at how this will affect your budget for 2013 and be prepared for this potential reduction in income.

There are other moves that you can make now like contributions to retirement or HMA accounts. What will work for you depends and a conversation with your CPA now can result in a huge savings for you and prepare you for changes starting January 1, 2013. What is the best in your situation depends on your situation. So now is the time to give me a call to discuss your situation and to see what opportunities you have now to minimize your taxes for 2012 and prepare for 2013. Please feel free to contact me using my contact information below.

Jeff Haywood, CPA
CPA Tax Superhero
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

I prepare the following types of tax returns:

Personal
Business
Estate/Gift
Trusts
Federal and State Returns

I especially value discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

Posted in Business, Financial Literacy, Income Taxes, Life, Tax Planning | Tags: Business, CPA, Deductions, Entrepreneurs, Expenses, Income, IRS, Money, Payments, Penalties, Profits, Retirement, Tax, Tax Return, Tax Tips, Taxes, Tips | No Comments »

Business, Taxes, IRS: Starting Your New Business and Your Taxes

May 23rd, 2012 | Author: admin

The biggest problem new businesses encounter is paying unexpected taxes when you file your first income tax return after starting your new business. The result can be a serious cash flow/debt problem. How does this happen and how can you avoid it?

Starting a New Business: Plan Ahead and Prepare Yourself:

Joe starts selling widgets or his wife starts doing shows and they are shocked at how much they owe when do their income tax return. When you operate a business on your own, without forming a corporation, your profits are subject to income tax plus self-employment tax. Self-Employment Tax is basically the equivalent of medicare and social security taxes but both the half that was deducted from your paycheck plus the half paid by your employer that you never saw. Yes, the self-employed pay both halves of these taxes because you are the both the employee and the employer. While the income tax on your profit should be expected what surprises people is the self-employment tax. The self-employment tax, in the past has been 15.3%, now is 13.3% but you can probably expect it to return to 15.3% eventually. So if you are in a 25% tax bracket you could be paying about 38.3% in income and self employment taxes on the profit of your business. So if your profit is $100,000 you will be paying about $38,300 of that back to Uncle Sam. You could be expecting to pay about $25,000 and so you saved that amount during the year, OK maybe you didn’t, and now where is the $13,300 going to come from? You have spent it already and you are investing in your growing business so now you are also going to be making payments to the IRS trying to catch up for last year. In the meantime now your taxes for the current year are going to be more than you expected. This is a big reason why many new businesses fail and why you should have a conversation with your CPA before you start your business.

Preparation and Actions to Take to Minimize Your Taxes:

An unexpected tax bill can be a real ‘kick in the gut’ and if you’re not careful it can cripple your business financially and it can steal your enthusiasm for your business. It helps so much as a business person to be positive and to be one who gives energy to others. If your tax bill hurts you emotionally you it can adversely affect your relationships with others. So first, know upfront, before you start the business, what to expect in regard to taxes and everything associated with your business. The successful are prepared for what is coming. By being prepared for how much tax you will pay you can save during the year and make estimated quarterly payments to the IRS to avoid having a large unexpected tax bill at the end of the year.

There are other things you can do as well, like timing expenses to minimize your profit for the year. You should always have conversations with your CPA during the year so you can be planning for the success of your business. You especially want to have a conversation about a month before the end of your tax year to have a strategy for timing expenses and investment decisions. To reduce your profit and hence taxes for the year you can pay for business expenses or invest in assets before the year-end. You may even be able to put them on a credit card and deduct the full purchase amount even though you do not pay the credit card until the following year. You will want to discuss this with your CPA, and I would be happy to serve you in this regard, but you also need to know that while moving up expenses or investments in assets into the current year could lower your profits and taxes for this year it probably also means higher profits and taxes in subsequent years. You also want to be careful to avoid spending dollars just to save pennies. This is why you need a good CPA who you regularly have business discussions with.

One more action to consider is forming a different entity type to use to reduce taxes. If you are my client and you tell me you expect to have a profit of $100,000 we are going to discuss forming an S-Corporation to lower your taxes as well as to provide some protection for your personal assets. This will be the subject of coming blog post.

Here are some other business related posts you should read:
6 Things You Should Know About Business Expenses – What Can You Deduct?
6 IRS Tax Tips About the Home Office Deduction
6 IRS Tax Tips for Self-Employed Individuals
IRS Top Six: Tax Tips For Making Estimated Payments + 1 free bonus

I am happy to take on new clients and help you prepare for success. Feel free to contact me using my information below.

Jeff Haywood, CPA
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

I prepare the following types of tax returns:

Personal
Business
Estates
Trusts
Federal and State Returns

I especially enjoy discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

Posted in Business, Business Entities, Income Taxes, Tax Planning | Tags: Business, CPA, Credit, Deductions, Expenses, Income, IRS, Tax, Tax Return, Tax Tips, Taxes | No Comments »

IRS: 8 Things to Know About Medical and Dental Expenses on Your Taxes

March 6th, 2012 | Author: admin

What can I deduct on my tax return for medical and dental expenses? For some tips on this subject notice what the IRS recently offered:

Eight Things to Know about Medical and Dental Expenses and Your Taxes

IRS Tax Tip 2012-30, February 14, 2011

If you, your spouse or dependents had significant medical or dental costs in 2011, you may be able to deduct those expenses when you file your tax return. Here are eight things the IRS wants you to know about medical and dental expenses and other benefits.

1. You must itemize You deduct qualifying medical and dental expenses if you itemize on Form 1040, Schedule A.

2. Deduction is limited You can deduct total medical care expenses that exceed 7.5 percent of your adjusted gross income for the year. You figure this on Form 1040, Schedule A.

3. Expenses must have been paid in 2011 You can include the medical and dental expenses you paid during the year, regardless of when the services were provided. You’ll need to have good receipts or records to substantiate your expenses.

4. You can’t deduct reimbursed expenses Your total medical expenses for the year must be reduced by any reimbursement. Normally, it makes no difference if you receive the reimbursement or if it is paid directly to the doctor or hospital.

5. Whose expenses qualify You may include qualified medical expenses you pay for yourself, your spouse and your dependents. Some exceptions and special rules apply to divorced or separated parents, taxpayers with a multiple support agreement or those with a qualifying relative who is not your child.

6. Types of expenses that qualify You can deduct expenses primarily paid for the diagnosis, cure, mitigation, treatment or prevention of disease, or treatment affecting any structure or function of the body. For drugs, you can only deduct prescription medication and insulin. You can also include premiums for medical, dental and some long-term care insurance in your expenses. Starting in 2011, you can also include lactation supplies.

7. Transportation costs may qualify You may deduct transportation costs primarily for and essential to medical care that qualify as medical expenses. You can deduct the actual fare for a taxi, bus, train, plane or ambulance as well as tolls and parking fees. If you use your car for medical transportation, you can deduct actual out-of-pocket expenses such as gas and oil, or you can deduct the standard mileage rate for medical expenses, which is 19 cents per mile from January 1 – June 30 and 23.5 cents from July 1 – December 31, 2011.

8. Tax-favored saving for medical expenses Distributions from Health Savings Accounts and withdrawals from Flexible Spending Arrangements may be tax free if used to pay qualified medical expenses including prescription medication and insulin.

For additional information, see Publication 502, Medical and Dental Expenses or Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

Publication 502, Medical and Dental Expenses ( PDF)
Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans ( PDF)

Hopefully you do not have medical and dental expenses but the reality is that most do and especially as you get older. There are ways to make you qualified medical and dental expenses deductible to you as you can see above. You may need to discuss your specific situation with an experienced tax professional. If so use my contact information to make an appointment to discuss your situation.

Jeff Haywood, CPA
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

I prepare the following types of tax returns:

Personal
Business
Estates
Trusts
Federal and State Returns

I especially enjoy discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

Posted in Income Taxes | Tags: CPA, Dental, Expenses, IRS, Medical, Tax, Tax Return, Tax Tips, Taxes, Tips | No Comments »

IRS: Tax Tips For The Self Employed

March 1st, 2012 | Author: admin

You started your own business and now you are wondering what you need to know about income taxes. To help you out, here are some recent tips from the IRS for the self-employed:

Tax Tips for the Self-employed

IRS Tax Tip 2012-16, January 25, 2012

There are many benefits that come from being your own boss. If you work for yourself, as an independent contractor, or you carry on a trade or business as a sole proprietor, you are generally considered to be self-employed.

Here are six key points the IRS would like you to know about self-employment and self- employment taxes:

Self-employment can include work in addition to your regular full-time business activities, such as part-time work you do at home or in addition to your regular job.
If you are self-employed you generally have to pay self-employment tax as well as income tax. Self-employment tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. You figure self-employment tax using a Form 1040 Schedule SE. Also, you can deduct half of your self-employment tax in figuring your adjusted gross income.
You file an IRS Schedule C, Profit or Loss from Business, or C-EZ, Net Profit from Business, with your Form 1040.
If you are self-employed you may have to make estimated tax payments. This applies even if you also have a full-time or part-time job and your employer withholds taxes from your wages. Estimated tax is the method used to pay tax on income that is not subject to withholding. If you fail to make quarterly payments you may be penalized for underpayment at the end of the tax year.
You can deduct the costs of running your business. These costs are known as business expenses. These are costs you do not have to capitalize or include in the cost of goods sold but can deduct in the current year.
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be indispensable to be considered necessary.

For more information see the Self-employment Tax Center, IRS Publication 334, Tax Guide for Small Business, IRS Publication 535, Business Expenses and Publication 505, Tax Withholding and Estimated Tax, available at www.irs.gov or by calling the IRS forms and publications order line at 800-TAX-FORM (800-829-3676).

Links:

Publication 334, Tax Guide for Small Business
Publication 535, Business Expenses
Publication 505, Tax Withholding and Estimated Tax
Schedule C, Profit or Loss from Business and instructions
Schedule C-EZ, Net Profit from Business
Schedule SE, Self-Employment Tax and instructions
Form 1040-ES, Estimated Tax for Individuals
Understanding Your 1099-K

Income tax returns for the self employed are very complicated. I am here to help you. Just contact me using my information below to get help from a CPA with years of experience preparing tax returns for the public.

Jeff Haywood, CPA
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

I prepare the following types of tax returns:

Personal
Business
Estates
Trusts
Federal and State Returns

I especially enjoy discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

Posted in Business, Income Taxes | Tags: Business, CPA, Expenses, Income, IRS, Tax, Tax Return, Tax Tips, Taxes, Tips | No Comments »

Year End Tax Moves: Take Action Now

December 16th, 2011 | Author: admin

Year End Tax Moves

Mr. CPA, What can I do to help with my tax situation for 2011?

Before the end of the year you want to look at your tax situation and make decisions and take actions to help with your taxes and your cash-flow. Hopefully your business is doing well in 2011 and you want to minimize your income taxes for the year. So first of all take a look at your income and expenses to get an idea how much profit you will have for the year. You may to add into your calculation business miles and home office expenses. If you have profits that you want to reduce to so as not to pay taxes on them for 2011 there are a few actions you can consider taking.

First, you can control when you receive and report income. So if you are working on a job or finishing a job for a client you can wait to bill them in January. If you are a cash basis taxpayer and you have already billed a client and you want that income in 2012 you can ask the client to wait to pay you until after the end of the year. That is a call they will love to receive.

Second, you can pay bills before the end of the year. As a cash basis taxpayer that wants to reduce 2011 income pay all outstanding bills before the end of the year. You may even want to prepay expenses like rent. For your personal return you can make sure you have paid your property taxes on your home. In some cases, especially where you have no or a very small mortgage balance and hence very little interest expense to deduct, then you may want to plan your property tax payments so every other year you pay two years of real estate taxes so as to be able to itemize your deductions on your tax return. How do you do this? It is simple. As an example you would pay your 2010 taxes on January 1, 2011 and then pay your 2011 taxes before December 31, 2011. By doing this you take two years of real estate taxes in one year. You can do this because the real estate taxes are deductible on your income tax return in the year you make the payment.

Now you also want to consider purchasing equipment for your business before the end of the year. If you need equipment you may be able deduct the full purchase price of the equipment this year if you purchase the equipment before the end of the year. Know that equipment you purchase using a credit card is potentially deductible when you charge it even though you do not payoff the credit card before the end of the year. So you may be able to by equipment in December that you can deduct on your income tax return for this year and with some retail credit cards not pay for it for six months or so without paying any interest. Keep in mind that your interest on your business credit card is also deductible. Finally, know that there are limits as to how much you can deduct in a year for equipment purchases. Check with your CPA or call me to discuss your situation.

Many taxpayers are not aware of these strategies. Your CPA should bring these to your attention and you should be having a year-end discussion every year. These discussions help you to get an idea or an expectation of what your taxes will be when you file your tax returns. A big tax bill is difficult enough but it is worse when you are not expecting it. So let’s have a conversation today about your situation. Feel free to use my contact information below to set an appointment for that discussion.

Know too that you may be able to reduce your taxable income by making a contribution to your retirement account. If you use an IRA you have until April 15th to make that contribution and use it to reduce your taxable income this year.

Please do not keep me as a secret. Please tell others about me and this site. I keep my practice at a manageable size so all my clients get the attention they need for their business and their personal income tax situations. I specialize in helping business owners and investors and also expatriates living out of the country. I also do individual tax returns. Please contact me today using the contact information below to make an appointment to discuss your situation.

Jeff Haywood, CPA
972-439-1955
jeff.jhtaxes@gmail.com

I prepare the following types of tax returns:

Personal
Business
Estates
Trusts
Federal and State Returns

I especially enjoy discussions about you, your business, your dreams and goals.

Take a look at these related posts:

Let’s Accomplish Great Things Together
How to Profit From Your CPA
A Most Valuable Resource For Entrepreneurs
Forming a New Business – Please Consult With Your CPA First

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For recent US income tax content see the following links:

Sometimes Money Costs Too Much
Let’s Accomplish Great Things Together
Can I Use My Loss To Get Money Back From Prior Year Taxes Paid?
IRS Top Ten: Tax Tips for Individuals Who Are Moving This Summer
IRS Top Ten: Tax Tips for Individuals Selling Their Home
IRS Tax Tips: Do You Owe the IRS Money? What You Need to Know.
IRS Tax Tips: Do You Owe the IRS Money? What You Need to Know.
Does the IRS Have Money Waiting For You
Ideas: How Young People Can Become Entrepreneurs and Find a Home
IRS Top Ten: Facts about Amending Your Tax Return
Are You Ready To Get Your First Apartment/Home?
How to Succeed in Business: Pricing
Credit for Education Expenses: American Opportunity Credit – Extended Through 2012
How to Prepare Before a Disaster Strikes
IRS: Summer Day Camp Expenses May Qualify for a Tax Credit
IRS Tax Tips for Students Starting a Summer Job
IRS Tax Tips for Deducting Charitable Contributions
Tax Planning Tips
Tax Tips – Tip Income
Stratospheric Success
Are You Ready to Purchase a Home? Factors to Consider.
Foreign Earned Income Exclusion
A Most Valuable Resource for Entrepreneurs
How to Profit From Your CPA
Begin With The End In Mind
If the band you are in starts playing different tunes
Where Is It? Tax Refund
Deadline for 2010 Personal Tax Returns Moved
Now is the time to file those late tax returns for previous years
IRS: 8 Things to Know if You Receive an IRS Notice
IRS: Nine Fact on Filing an Amended Return
IRS: Eight Facts on Penalties
IRS Top Ten: Making Federal Tax Payments
Forming a New Business – Please Consult With Your CPA First
Questions After I Have Filed My Return

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Posted in Business, Income Taxes, Tax Planning | Tags: Business, CPA, Credit, deadline, Deductions, Entrepreneurs, Expats, Expenses, Income, IRS, Tax, Tax Return, Tax Tips, Taxes | 2 Comments »

IRS Top 7: Tax Tips For Rental Income and Expenses

April 8th, 2011 | Author: admin

Rental Income and Expenses

Mr. CPA, do I need to know about reporting income and expenses for my rental properties? Notice what the IRS has to say about this question and especially pay attention to tip number 7.

Seven Tips About Rental Income and Expenses

IRS Tax Tip 2011-45, March 4, 2011Do you rent property to others? If so, you’ll want to read the following seven tips from the IRS about rental income and expenses.

You generally must include in your gross income all amounts you receive as rent. Rental income is any payment you receive for the use of or occupation of property. Expenses of renting property can be deducted from your gross rental income. You generally deduct your rental expenses in the year you pay them. Publication 527, Residential Rental Property, includes information on the expenses you can deduct if you rent property.

1. When to report income. You generally must report rental income on your tax return in the year that you actually receive it.

2. Advance rent. Advance rent is any amount you receive before the period that it covers. Include advance rent in your rental income in the year you receive it, regardless of the period covered.

3. Security deposits. Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year.

4. Property or services in lieu of rent. If you receive property or services, instead of money, as rent, include the fair market value of the property or services in your rental income. If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary.

5. Expenses paid by tenant. If your tenant pays any of your expenses, the payments are rental income. You must include them in your income. You can deduct the expenses if they are deductible rental expenses. See Rental Expenses in Publication 527, for more information.

6. Rental expenses. Generally, the expenses of renting your property, such as maintenance, insurance, taxes, and interest, can be deducted from your rental income. Beginning December 31, 2010, if you make certain rental property expense payments of $600.00 or more, in total, to a single payee, you must issue Form 1099 MISC (Miscellaneous Income), to each payee and file it with the IRS. See Instructions for Form 1099MISC for more information.

7. Personal use of vacation home. If you have any personal use of a vacation home or other dwelling unit that you rent out, you must divide your expenses between rental use and personal use. If your expenses for rental use are more than your rental income, you may not be able to deduct all of the rental expenses.

For more information on rental income and expenses see Publication 527. This publication can be downloaded from http://www.irs.gov or ordered by calling 800-TAX-FORM (800-829-3676).

Links:

Publication 527, Residential Rental Property

Notice what else the IRS says about tip number 7 in the instructions to 1040 schedule E:

“If you or your family used the unit for personal purposes in 2010 more than the greater of:

14 days, or
10% of the total days it was rented to others at a fair rental price.

If (the above applies) and you rented the unit out for at least 15 days in 2010, you may not be able to deduct all your rental expenses. You can deduct all the following expenses for the rental part on Schedule E.

Mortgage interest.
Real estate taxes.
Casualty losses.
Other rental expenses not related to your use of the unit as a home, such as advertising expenses and rental agents’ fees.

If any income is left after deducting these expenses, you can deduct other expenses, including depreciation, up to the amount of remaining income. You can carry over to 2011 the amounts you cannot deduct.”

If you have rental properties it is especially a good idea to have an experienced CPA prepare your tax returns to minimize your taxes and keep you out of trouble. To have me, an experienced CPA, help you prepare your tax returns contact me using the phone number or email address listed below.

Jeff Haywood, CPA
972-439-1955
jeff.jhtaxes@gmail.com

I prepare the following types of tax returns:

Personal
Business
Estates
Trusts
Federal and State Returns

Also, I am available for tax planning and discussions about business, retirement planning and life goals.

For recent US income tax content see the following links:

Begin With The End In Mind
If the band you are in starts playing different tunes
Where Is It? Tax Refund
Deadline for 2010 Personal Tax Returns Moved
Now is the time to file those late tax returns for previous years
IRS: 8 Things to Know if You Receive an IRS Notice
IRS: Nine Fact on Filing an Amended Return
IRS: Eight Facts on Penalties
IRS Top Ten: Making Federal Tax Payments
Forming a New Business – Please Consult With Your CPA First
Questions After I Have Filed My Return

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Posted in Income Taxes | Tags: CPA, Expenses, Income, IRS, Rental, Taxes | 2 Comments »