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Month: April 2022

How to Send Tax Documents Correctly to Avoid IRS Trouble

You have heard the horror stories about mail sent to the IRS that remains unanswered for months. Reportedly, the IRS has mountains of unanswered mail pieces in storage trailers, waiting for IRS employees to process them. Because the understaffed IRS is having so much trouble processing all the documents it receives, you need to protect yourself when you send an important tax filing due by a specific deadline. If you can file a document electronically, do so. The IRS deems such filings as filed on the date of the electronic postmark. If you must file a physical document with the

A Partnership With Multiple Partners: Good or Bad?

The generally favorable federal income tax rules for partnerships are a common reason for choosing to operate as a partnership with multiple partners instead of as a corporation with multiple shareholders. The most important partnership tax benefit rules can be summarized as follows: You get pass-through taxation. You can deduct partnership losses (within limits). You may be eligible for the Section 199A tax deduction. You get basis from partnership debts. You get basis step-up for purchased interests. You can make tax-free asset transfers with the partnership. You can make special tax allocations. Partnership taxation is not all good stuff. There

Renting a Vacation Home for Extra Income. Taxable?

If you have a home that you both rent out and use personally, you have a tax code-defined vacation home. Under the tax code rules, that vacation home is either a personal residence or a rental property. The tax code classifies your vacation home as a rental property if you rent it out for more than 14 days during the year, and your personal use during the year does not exceed the greater of (a) 14 days or (b) 10 percent of the days you rent the home out at fair market rates. Count actual days of rental and personal

Health Savings Accounts(HSA): The Ultimate Retirement Account

It isn’t easy to make predictions, especially about the future. But there is one prediction we’re confident in making: you will likely have substantial expenses for health care after you retire. Personal financial experts estimate that an average retired couple age 65 will need at least $300,000 to cover health care expenses in retirement. You may need more. The time to save for these expenses is before you reach age 65. And the best way to do it may be a Health Savings Account (HSA). After several years, you could have a fat HSA balance that will help pave your

Self-Employed Or Employee Taxes What’s Better?

Perhaps you get a check, or you receive cash for the services you provide your employer or customers.  If you get a paycheck have you ever looked at your paystub? Do you understand what your paystub tells you? It breaks down gross pay, net pay, withholding, pre-tax and post-tax deductions. You probably get something called a W-2 sometime in January following the new year. Does this ring a bell?  Perhaps you get paid with cash, are you an independent contractor? That’s someone who works odd hours on call or does special one-off jobs for a business. If so, you probably