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Year End Tax Steps!

12/28/2018

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December 28, 2018

Year End Tax Steps!

Take an inventory of your product.  If there is product which is expired, damaged or no longer sell-able for whatever reason, take it out of your inventory and mark your total cost as “spoiled”.  This is a deductible expense.  

If you have the ability to sell your excess inventory at a slightly discounted rate do so.  Holding large amounts of inventory at year end is not a Tax Advantageous strategy.  

Speaking of inventory, many companies are trying desperately to get rid of theirs.  Now is the time for some smoking deals on computers, tablets, and those big screen monitors you’ve wanted.  You will be able to deduct the cost of this business equipment 100% up to one million dollars.  

Car expenses, don’t forget that your car is a tax-deductible expense.  Keep track of your miles!  Business miles are not just to see a customer.  Trips to events, the post office and to pick up inventory are deductible!  Keep clear records.  I use a phone app called Mile IQ which runs silently in the background.  You can then classify your drives as business or personal at the end of the day.  You will also want to track actual expenses to see whether the mileage or an actual expense deduction is the most Tax Advantageous strategy.  

Don’t forget your home office!  A portion of your home is deductible.  This is an often-overlooked tax strategy.

As many of you may know, the Tax Code received its biggest overhaul in history on November 2, 2017, effective January 1, 2018.  While many people will no longer have to itemize due to the larger standard deduction, it is imperative that business owners get the appropriate tax advice to take advantage of a new and largely misunderstood deduction called the Section 199A deduction, also known as a 20% Qualified Business Pass-Through Deduction.  Many will be eligible for this potentially huge tax savings.  

Feel free to contact me offices if you have any questions.

702-233-6310
or send an email to:
RhondaTaxCPA@gmail.com​
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Rule Applied to ESAs

2/21/2017

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One per year rollover rule also applies to ESA's!
  • Americans have opened Coverdell ESA accounts to pay for qualified educational expenses for a designated beneficiary.
  • An ESA must be established and contributions made while the beneficiary is under age 18 (unless a special needs beneficiary).
  • ESA distributions that aren’t more than the beneficiary’s adjusted qualified education expenses for the year are tax-free.
  • ESA assets may be rolled over to another ESA. However, the IRS has clarified that the one per year rollover rule also applies to rollovers of ESA accounts. Trustee to trustee transfers are still unlimited.
Source: www.irs.gov & Tax Tips Americas Tax Solutions  Photo credit Wikimedia Commons

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New Law to Affect Refunds in 2017

12/22/2016

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The IRS has announced initial plans for processing tax returns involving the Earned Income Tax Credit and Additional Child Tax Credit during the opening weeks of the 2017 filing season. The IRS is sharing information now to help the tax community prepare for the 2017 season, and plans are being made for a wider communication effort later in the summer and fall to alert taxpayers about the changes that will affect some early filers.

This action is driven by the Protecting Americans from Tax Hikes Act of 2015 that was enacted into law on December 18, 2015. Section 201 of this new law mandates that no credit or refund for an over payment for a taxable year shall be made to a taxpayer before February 15 if the taxpayer claimed the earned income tax credit or additional child tax credit on the return.

Source:The Tax Book Photo:Pexels

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RMD Basics

12/15/2016

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If you own or are the beneficiary of an IRA, 401(K) or other retirement plan, review this to avoid an RMD ( required minimum distribution) error.  Failure to take at least the RMD  amount each year results in a 50%  penalty by the IRS ! 

  • IRA owners:  your first RMD  must be taken no later than April 1st of the the year following the year you turn 70 1/2 .
  • You reach age 70 1/2 on the date that is 6 calendar months after the date of your 70th birthday. 
  • IRA owners after your very first RMD, all subsequent RMDs must be taken no later than December 31st of each year.
  • RMDs are generally calculated by dividing the adjusted market value of your IRA as of December31st of the preceding year by the distribution period that corresponds with your age in the Uniform Lifetime Table (IRS Publication 590).
  • You must calculate the RMD amount for each IRA separately,  However, if you have more than one IRA (must be the same type), you don't have to take a separate RMD  for each-you can aggregate and withdraw the entire amount from just one or withdraw a portion from each IRA to satisfy your RMD. 
  • You can always withdraw more than the minimum distribution amount....just be prepared to pay the taxes.
  • Failure to take a timely RMD results in 50% penalty on the undistributed amount - this rule apples to both IRA owners and IRA beneficiaries. 
Photo :  https://www.flickr.com/photos/stevendepolo/5437288053  Source: www.irs.gov
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Top Ten Accounting Mistakes

8/1/2016

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  • Trying to avoid payroll requirements by calling your employees, "independent contractors."
  • Not choosing the correct type of business entity for yourself.
  • Not keeping accurate and up to date records.
  • Not hiring a professional to help you with your accounting needs.
  • Not providing your accountant with timely information.
  • Not checking the references of your accountant
  • Not meeting with your accountant during the year for tax planning.
  • Not selecting an accountant familiar with your business/profession.
  • Not being truthful with your accountant.
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10 Most Often Overlooked Real Estate Tax Deductions

8/1/2015

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  • Failure to deduct principal residence acquisition mortgage fee.
  • Failure to deduct home mortgage refinance loan fees over the life of the home loan.
  • Failure to deduct undedicated loan fees from prior home loan refinance.
  • Failure to deduct any mortgage prepayment penalty you paid.
  • If you changed your job location and your residence, your moving costs may be deductible.
  • Remember to deduct any casualty loss.
  • Failure to deduct prorated property tax in year of home sale or purchase.
  • Failure to deduct prorated mortgage interest in the year of home sale or purchase.
  • Failure to deduct prepaid property taxes and mortgage interest.
  • If your home is on lease land you may be entitled to deduct ground rent.
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    Author

    Rhonda A. Mannes,
    ​CPA, ARA.
    Phone: 702-233-6310


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