Mortgage Interest Deduction
If you sold your principal residence during the year and acquired a new principal residence, the deduction for any interest on your acquisition indebtedness (i.e., mortgage) could be limited. The TCJA limits the interest deduction on mortgages of more than $750,000 obtained after December 14, 2017. The deduction is limited to the portion of the […]
Home Office Expenses
When the TCJA eliminated the miscellaneous itemized expense deduction, it eliminated the ability of employees to deduct home office expenses. However, taxpayers with their own business can still file a Schedule C and take a home office expense deduction if part of the home is used for that business.
Charitable Contribution Deductions
As a result of the increase in the standard deduction, some taxpayers are no longer getting a benefit from itemizing their deductions, such as charitable contributions, as they once were. However, as noted above, you can still help charities and get a tax benefit if you contribute enough to get over the standard deduction amount […]
Retirement Planning
By investing in a qualified retirement plan you’ll not only receive a current tax deduction, thereby reducing current year income tax, but you can sock away money for your retirement years. If your employer has a 401(k) plan and you are under age 50, you can defer up to $19,000 of income into that plan. […]
Section 179 Expensing and Bonus Depreciation Deductions
Generally, the two biggest deductions that can reduce a client’s taxable income are the Code Sec. 179 expense deduction and the 100 percent bonus depreciation deduction. And, as a result of TCJA, bonus depreciation can now be taken on used property as well as new property. It’s important to remember that bonus depreciation rules apply […]
Vehicle-Related Deductions and Substantiation Requirements
In an audit involving a business, the IRS is quick to focus on vehicle expense deductions and whether such deductions are adequately substantiated. Thus, practitioners should ensure that the following are part of any client’s business tax records with respect to each vehicle used in a business: (1) the amount of each separate expense with […]
401(k) distribution for first-time home purchase subject to 10% additional tax
The Tax Courts have found that a 401(k) distribution used for a first-time home purchase was subject to a 10% additional tax because the exception to the additional tax for first-time home purchases only applies to distributions from IRAs. Distributions from qualified retirement plans are subject to a 10% additional tax, unless an exception applies. […]
Method of Accounting for Taxable Income
There are various methods on how to calculate taxable income for businesses. The two most common methods are called cash basis and accrual basis. The difference between cash and accrual accounting lies in the timing of when sales and purchases are recorded in your accounts. Cash accounting recognizes revenue and expenses only when money changes […]
QBI Tax Deductions for Real Estate
If all the general conditions are met, the deduction can be claimed for a rental real estate activity – but only if the activity rises to the level of being a trade or business. An activity is generally considered to be a trade or business if it is regular, continuous, and considerable. Because determining whether […]
New Business-Related Tax Rules for 2018
The business-related provisions in the TCJA are permanent and generally take effect beginning with 2018 tax years. For businesses, highlights of the new law include: (1) an increase in amounts that may be expensed under Section 179 and an increase in the bonus depreciation deduction; (2) a 21 percent flat corporate tax rate; (3) a […]
