As you likely know, you may no longer deduct directly related or associated business entertainment effective January 1, 2018.
Common forms of directly related and associated entertainment that are no longer deductible include business meals with clients or prospects, golf, football games, and similar business-building activities.
That’s the bad news.
The good news is that tax code Section 274(e) pretty much survived the entertainment bloodletting. Under this section, you continue to deduct
- entertainment, amusement, and recreation expenses you treat as compensation to employees and that are included as wages for income tax withholding purposes;
- expenses for recreational, social, or similar activities (including facilities therefor) primarily for the benefit of employees (other than employees who are highly compensated employees);
- expenses that are directly related to business meetings of employees, stockholders, agents, or directors (here, the law limits expenses for food and beverages to 50 percent);
- expenses directly related and necessary to attendance at a business meeting or convention such as those held by business leagues, chambers of commerce, real estate boards, and boards of trade (here, the law also limits expenses for food and beverages to 50 percent);
- expenses for goods, services, and facilities you or your business makes available to the general public;
- expenses for entertainment goods, services, and facilities that you sell to customers; and
- expenses paid on behalf of nonemployees that are includible in the gross income of a recipient of the entertainment, amusement, or recreation as compensation for services rendered or as a prize or award.
When you are considering using the above survivors of tax reform’s entertainment cuts, you will find good strategies in the following:
- Renting your home to your corporation.
- Taking your employees on an employee party trip.
- Partying with your employees.
- Making your vacation home a deductible entertainment facility.
- Creating an employee entertainment facility.
- Deducting the entertainment facility, because facility use creates compensation to users.
If you would like our help implementing any of the strategies above, please don’t hesitate to call us at 512-525-8076
#cpa #texascpa #austincpa #georgetowncpa #roundrockscpa #leandercpa #cedarparkcpa #libertyhillcpa #huttocpa #taxplanning #taxstrategies #taxdeductions #taxconsultant #taxpreparation #ppp #payrollprotectionprogram #caresact
If you are starting, buying, or refinancing a business using retirement funds, you need to know that there is a way to do it and save your self a lot of money.
EXAMPLE TAX STRATEGY: ROBS Plan
Rollovers as Business Start-Ups (ROBS) are arrangements in which current or prospective business owners use their 401(k), IRA or other retirement funds to pay for new business start-up costs, for business acquisition costs or to refinance an existing business.
It allows you to use these proceeds to start a business without paying tax or penalties. For one of my clients it was more than $40,000 on a $400k investment!
Do you own a business?
This one strategy saved my client over $3000 in Taxes and funded their children’s college fund.
Tax Strategy: Hiring Children (and Grandparents)
Sole-proprietors and spousal partnerships can pay children up to $12,000 without incurring any tax neither income nor payroll for legitimate services rendered to the business. S and C corporations and non-spousal partnerships can also take advantage of this strategy. And YES! There are even more Tax Strategies that can work for you. Contact me for a complimentary consultation.
If you are a Real Estate Investor, Cost Segregation can be a great strategy for reducing taxes. In this case, almost $53000 in Tax Deductions!
Cost Segregation accelerates the depreciation of certain components of the property. Things like appliances or HVAC that need to be replaced sooner than standard depreciation, which is 27 years for residential and 30 years for commercial. This amounts to a reduction in your current tax liability, resulting in upfront cash flow.
Like most successful realtors, brokers and investors, I am sure that you have a team of professionals that you prefer to work with. Loan officers, Escrow Officers, Insurance Agents, Home Inspectors, and Trades that you trust, get the job done and take care of your customers.
That’s why you need a CPA that can do more than just your Tax Return. Someone who knows what you need to do to maximize your earnings, pay less taxes and increase cash flow. Someone who can show you…
-Deductions that apply specifically to the Real Estate Industry that you may be missing out on.
– Help you determine the best Legal Entity Structure from a Tax perspective.
-Dozens of Tax Strategies that you can implement that could literally save you $10,000, $20,000, $50,000 and more every year.
-Stay on top of changing tax regulations such as the Tax Cuts and Jobs Act and Cares Act that affect you, your business and your income.
As a licensed CPA for 30 years, a licensed realtor (inactive)and real estate investor, I would love to help you. If you want to take your business to the next level, contact me for a complimentary consultation.
#cpa #austincpa #georgetowncpa #roundrockscpa #leandercpa#cedarparkcpa #libertyhillcpa #huttocpa #taxplanning #taxstrategies#taxdeductions #taxconsultant #taxpreparation #ppp#payrollprotectionprogram #caresact #realtorcpa #realestatecpa #brokercpa
I just saved my client $8,800 using this one Tax Strategy alone!
The Tax Cut and Jobs Act had massive changes for businesses. Unfortunately, many are not aware of the tax savings it can provide. Here is a example.
Example Tax Strategy: Section 199A
Section 199A of the Internal Revenue Code provides many taxpayers a deduction of up to 20% of qualified business income. That’s a 20% deduction right off the top!
Eligible taxpayers may also be entitled to a deduction of up to 20% of their combined qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income.
The type of legal entity your business is can have a dramatic effect on your money. Different legal entity structures have different rules regarding deductions and self-employment taxes.
Tax Strategy implemented: Schedule C to S-Corp
As a sole-proprietor operating with an LLC we elected to be treated as an S-corporation for tax purposes. By moving operations off of the individual’s tax return to an S-Corp we were able to significantly reduce the self employment tax.
EXAMPLE TAX STRATEGY: ROBS Plan
Rollovers as Business Start-Ups (ROBS) are arrangements in which current or prospective business owners use their 401(k), IRA or other retirement funds to pay for new business start-up costs, for business acquisition costs or to refinance an existing business. It allows you to use these proceeds to start a business without paying tax or penalties. For one of my clients it was more than $40,000!