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Shareholders of closely held C corporations commonly lease real estate, equipment, and other property to the corporate entity, either directly or through a separate partnership, a limited liability company, or an S corporation. Advantages that can motivate these rental arrangements include the following: Avoiding payroll taxes: Rental income from real estate is not subject to …
Taxpayers must pay their taxes throughout the year either through payroll withholding or by making quarterly estimated payments; otherwise, tax underpayment penalties are assessed. However, underpayment penalties are avoided if any of the following situationsapply: Small balance due after federal income tax withholding: The tax, after reducing it for federal income tax withheld, is less …
Continue reading Strategies for minimizing estimated tax payments
The IRS is working on a draft version of the 2018 Form 1040, U.S. Individual Income Tax Return, that reduces the size of the form to two half-pages in length and eliminates more than 50 lines, compared to the 2017 version of the form. The draft form moves many items that The 2018 draft form, …
Continue reading Form 1040 to be shorter but with more schedules
The IRS and Treasury published final regulations (T.D. 9829) on Jan. 2, 2018, that provide guidance on electing out of the new centralized partnership audit regime introduced by the Bipartisan Budget Act (BBA) of 2015, P.L. 114-74. It is important that partners, partnerships, and their representatives be aware of the rules in the final regulations …
In Notice 2018-28, the IRS answered important questions about the new business interest limit in Sec. 163(j), as amended by P.L. 115-97, known as the Tax Cuts and Jobs Act (TCJA), and asked for general comments on regulations it plans to issue. Under amended Sec. 163(j), the deduction for business interest is limited to the …
Continue reading IRS issues first guidance on new business interest limitation
During the pendency of a divorce, a taxpayer was ordered by a family court to transfer funds to an individual retirement account (IRA) in his spouse's name. Where the taxpayer received a distribution of funds from his IRAs and then wrote checks to the spouse, the exclusion from taxation available under Sec. 408(d)(6) was inapplicable, …
Continue reading IRA distribution to pay spousal support is taxable
The IRS provided information to taxpayers about changes in the use of standard mileage rates and increased depreciation limits for passenger automobiles as a result of P.L. 115-97, known as the Tax Cuts and Jobs Act, which made amendments to Secs. 67 and 217. In Notice 2018-42, the IRS modified Notice 2018-03, which provided the …
Continue reading Standard mileage rates, depreciation amounts updated
To give grantors and contributors to tax-exempt organizations more easily accessible guidance on deductibility and reliance issues, the IRS has combined into one revenue procedure previous scattered pieces of guidance dating back to 1981 (Rev. Proc. 2018-32). The new revenue procedure tells grantors and contributors when they can rely on a listing of an organization …
Running a business can be expensive. Everything comes at a cost, from keeping the lights on to buying inventory. Luckily, you may be able to deduct some of these business expenses to reduce your taxes. Even super small businesses with no or few employees can benefit from these deductions. Note: If you plan to claim …
Continue reading 11 Business Deductions That Even the Smallest Businesses Can Claim
The IRS issued the calendar year 2019 inflation-adjusted figures for the annual contribution limits for health savings accounts (HSAs) and the minimum deductible amounts and maximum out-of-pocket expense amounts for high-deductible health plans (Rev. Proc. 2018-30). Under Sec. 223, individuals who participate in a high-deductible health plan (HDHP) are permitted a deduction for contributions to …
Continue reading IRS issues HSA contribution limits for 2019
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