Blog | The Tax Prep Team, Inc.
- Overlooked Opportunities
An often overlooked tax savings opportunity comes from not fully understanding how you can use your cars as a deduction on your tax return. It is very common for people who have a Schedule C sole proprietor type business to claim their mileage on automobiles. But the privilege of using personal deductions on a tax return is not limited to someone who is filing a Schedule C. For instance, a landlord might own three apartment buildings and file a schedule E on his personal tax return and not feel like he is “self-employed” as he has a full-time W-2 job. However, the use of his personal car on that schedule E is just as deductible as it is for the
- Charitable Planning for Younger Clients ~ with a Twist
Often people will have one-time “Income Events” that greatly increase the income tax due in that year. Finding ways to mitigate that additional tax, especially for younger people, can be challenging. In some cases, setting up a Charitable Lead Trust (CLT) in order to receive an upfront income tax deduction might be viable option. A person who has significant and unusual taxable income in a particular year can establish the grantor lead trust and use the charitable income tax deduction to mitigate the impact of taxes in his or her situation. An example might be someone who has received the proceeds from selling a business, or a stock option at work is coming due. A far more common and likely
- Business Owners Often Paint Themselves Into a “Tax Corner”
As weather interrupts some parts of the country and business owners have to scramble and fill in the gaps of employees, supplies, deliveries and the like, it’s easy for them to worry about taxes later, after all, there’s “plenty of time.” That often comes back to bite them though, sometimes hard. If they run their business as a sole proprietorship then yes, they have until mid-April to file, and until mid-October if they file an extension. However, the majority of small businesses under pay tax estimates, if they pay them at all, and the first filing date (mid-April) is when the taxes are due, even with an extension to file. The penalties and interest are based on what’s owed and
- They Zig, We Zag
People who are worried about the 10 year rule, requiring beneficiaries of inherited IRAs to withdraw the entire balance within 10 years, can double that time with a CRT beneficiary in front of inheritors. What if you really have a big IRA and the 10 year rule just isn’t enough of a stretch to help your beneficiary stay out of the top tax bracket? Or any other reason you care about reducing the negative tax impact from the 10-year rule? You could use other remaining tax rules to your benefit by setting up a charitable trust. A charitable trust allows the retirement assets to continue growing tax-deferred, even once the assets are distributed from the retirement account into the CRT.
- Tax Planning Often Has Bonus Benefits
Have you worked toward losing weight in the past because you want to look more attractive, or fit into an expensive wardrobe you already own? When you lose weight you often also lower your blood pressure and/or cholesterol as a bonus. It might not be the primary motivation, but the extra benefit is of course welcome! If you are a business owner, then we pose this question. Some time ago you had an idea. Over the years your turned that idea into a successful and profitable business. Have you properly protected what you worked so hard to build? An unexpected turn of events could put your biggest asset at risk. Did you know that moving business earnings into a qualified
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