Starting a new business and wondering how and when tax deductions will occur? Most important to know is that most expenses incurred before a business begins cannot be deducted or amortized until the year the business becomes active. Business Expense Basics Section 162 of the Internal Revenue Code allows current deductions for so-called ordinary and necessary business expenses. Section 162 …
The earned income credit (EIC) has been around for years. But it’s never been worth as much as it will be for 2021 under the new American Rescue Plan Act (ARPA). Some favorable changes are only for the 2021 tax year, while others are permanent. The Basics The EIC is targeted at lower and moderate-income individual taxpayers who work for a …
The days of classic “tax shelters”— such as cattle breeding or oil drilling deals — are long gone. But at least one major tax shelter is still standing: Your home. If you own your principal residence, you can cash in on a bevy of tax breaks, saving thousands of tax dollars or even more. Here are six ways your home …
Each year, millions of taxpayers claim an income tax refund. To be sure, receiving a payment from the IRS for a few thousand dollars can be a pleasant influx of cash. But it means you were essentially giving the government an interest-free loan for close to a year, which isn’t the best use of your money. Fortunately, there is a …
As the year winds down, business owners have a lot to think about. One item that you should keep top of mind is next year’s budget. A well-conceived budget can go a long way toward keeping expenses in line and cash flow strong. The question is: Where to begin? Well, to answer this question, we don’t have just one suggestion …
When the deductible expenses of a business exceed its income, a net operating loss (NOL) generally occurs. If you’re planning ahead or filing your income tax return after an extension request and you find that your business has a qualifying NOL, there’s some good news: The loss may generate some tax benefits. Carrying back or forward The specific rules and …
You might be able to claim a deduction for the business use of a home office. If you qualify, you can deduct a portion of expenses, including rent or mortgage interest, depreciation, utilities, insurance, and repairs. The exact amount that can be deducted depends on how much of your home is used for business. Basic rules for claiming deductions The …
With health care costs continuing to climb, tax-friendly ways to pay for these expenses are more attractive than ever. Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs) and Health Reimbursement Accounts (HRAs) all provide opportunities for tax-advantaged funding of health care expenses. But what’s the difference between these three accounts? Here’s an overview: HSA. If you’re covered by a qualified …
Many people set up a revocable, or “living,” trust to shield assets from probate and take advantage of other benefits. For the trust to work, you must transfer assets to it that would otherwise go through probate — a process known as “funding” the trust. Most people fund their trusts around the time they sign the trust documents. Once your …