CURRENT EDITION

The Bucket List (Part 2): Living Large in Retirement While Minimizing Your Taxes
In Part 1 of this series, we took a deeper dive into IRMAA planning and minimizing tax on your Social Security benefits. You play a large role in shaping your retirement years in terms of lifestyle and financial health. Think of taking advantage of the many techniques to lower your tax during your retirement years as another aspect of self-care. By treating your financial health and well-being as carefully as you treat your mental and physical well-being, you can ensure that you have resources to attain your financial goals and support yourself in the style for which you’ve planned. In my practice, I see a wide range of client behavior surrounding retirement – from no planning to thoughtful, long-range planning. Looking ahead, whether you’re working with your tax professional and financial team or whether you’re planning on your own, pays off enormously.
Please read on for some additional tips and techniques for tax savings involving charitable giving, Roth IRA conversions, and minimizing capital gains taxes – and two more examples.
Reduce Your Taxes by Making Your Spouse a Business Partner
Question: Can I save S/E tax and create passive income by having my spouse own my entity? Answer: Potentially, but it depends on a number of factors. If you’re a sole proprietor or single member LLC, you’ve probably felt the sting of self-employment taxes (S/E tax). If you and your spouse work together and you’re not incorporated, the IRS generally considers you a 50/50 partnership and both spouses’ earnings are subject to S/E tax. This is true even if your spouse minimally participates in the activity. That’s right, even without a partnership agreement, if you and your spouse both share in the profits and losses of an unincorporated business, the IRS considers that you have a partnership owned equally. The IRS calculates self-employment taxes by apportioning 50 percent of the earnings to each spouse. It’s possible to pay way more than you need to if your profits are more than the threshold for Social Security. One way around this is to make your non-participating (or passively involved) spouse your business partner. But if you live in a community property state, be sure to follow these guidelines to secure your savings.
Read MoreBe Careful When Using a C Corp to Avoid the Hobby Loss Rules
Starting a business is hard. Running a business is hard. And often, it isn’t profitable either – at least not right away. As if losing your money isn’t enough torture, it can get worse. If your business is not profitable and remains that way for a while the IRS can reclassify it as a hobby. This is really bad because while you still have to pay tax on your hobby income, you can’t deduct any of the expenses. Ouch! One strategy around this is to reorganize as a C corporation (since code section 183 doesn’t apply to them). However, if you’re thinking about using this to deduct expenses from your hobby, be careful! A taxpayer, a courtroom, and a whole lotta cats (explanation later) might change your mind. Click here to continue reading.
Read MoreConservation Easements – Is This Winning?
Looking for lucrative deductions to reduce your taxable income? Many people are turning to Conservation Land Easements (CE), and the tax authorities are doing their best to deny these deductions. When a property meets the IRS criteria for a conservation easement, the owner may qualify to deduct thousands of dollars simply by acquiring the right kind of land an LLC holds. Often, these deductions are worth much more than the actual cost of getting the LLC interest. Sounds appealing doesn’t it? Under a conservation easement, a property’s owner gives up the right to make certain changes to that property to preserve it for future generations. Such an easement usually limits the usefulness of the property and lowers its value. But the tax deduction is not based just on the property’s reduction in value. The magnitude of the deduction comes into play when the deduction’s value is calculated by taking the difference between the appraised “highest and best use” of the property and its new reduced value. These best use appraisals often make assumptions about the property’s potential creating massive tax deductions, which, of course, leave taxpayers lining up to claim. But be careful! The IRS is cracking down on what it calls an “abusive tax deduction”; even going so far as to list the strategy on its Dirty Dozen list of tax scams. Yet even after spending billions of dollars, the service is not having much success. In fact, it’s losing key arguments on the strategy. Continue reading to learn how to participate safely.
Read MoreMore Free Money With the American Rescue Plan Act of 2021
On Wednesday, March 11, President Biden signed into law the American Rescue Plan Act (ARPA) of 2021, a $1.9 trillion COVID stimulus package. The ARPA contains a mix of retroactive and prospective tax breaks in the form of credits, exclusions from income, and even new tax-free grant programs. Let’s take a look at the most tax significant items in the bill.
Read MoreDon’t Overpay Tax on Crypto Forks and Airdrops
Practically overnight, cryptocurrency has gone mainstream, with more and more investors funneling money into Bitcoin, Dogecoin, and other cryptocurrencies. The IRS has responded with increased interest and scrutiny, demonstrated by the addition of the cryptocurrency question on the front page of 1040. Whether you have invested in cryptocurrency or not, you are required to answer this tax return question. Many investors choose to take the most conservative position to avoid future correspondence from the IRS but trying to avoid a letter is no reason to pay more tax than necessary! After all, the Supreme Court has long held that a taxpayer has the right to do everything possible under the law to reduce tax.
Read MoreMoving to a Low Tax State
Looking to escape high state taxes? Perhaps the taxpayer wants to leave the gridlock, housing congestion, and cement jungles behind for the likes of slower, less expensive living? COVID-19’s long-term impact on urbanization may be uncertain, but we have already seen people moving to low-tax states because these states offer more land and outdoor space. Along with the people, many businesses are also looking to relocate to low tax jurisdictions. But before packing up that U-haul, consider how to lock in your tax savings; otherwise, there may be a nasty bill waiting for you in that new mailbox.
Read MoreGo the Extra (Tax) Mile
Question: Can my business still take a deduction for my car if the title is in my name? Answer: If you want to get all the business deductions you are entitled to for your car, it’s better to have the vehicle titled in your business’s name. Most taxpayers continue to use their vehicles for both personal use and business purposes, as a result, most car titles show just the individual’s name as the owner. This can present a big problem and potential lost deductions, especially due to the Tax Cuts and Jobs Act (TCJA). It is important to review the rules since they have changed recently. You may have deducted expenses on past tax returns as an unreimbursed employee vehicle expense. But under tax reform, the miscellaneous itemized deductions were repealed until 2026, and this is an important rule change. Read on to learn how to still benefit after tax reform and why it can help you go the extra tax mile to title the car in your business’s name.
Read MoreIs Your Spouse Innocent or Injured? Part One: The Injured Spouse
Jack and Jill went up the hill to have a lovely wedding Jack fell down and broke his crown When Jill learned all his tax debts That pretty much describes the origin of the taxes faced by an injured spouse: The taxpayer was not married to that spouse at the time he or she incurred the tax obligation or it was assessed or did not sign the tax return where the balance due originated. In other words, it was never the injured spouse’s debt or obligation in the first place. What kinds of debts or taxes might the IRS collect (or “offset”) that would affect the injured spouse’s refund?
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CURRENT EDITION

The Bucket List (Part 2): Living Large in Retirement While Minimizing Your Taxes
In Part 1 of this series, we took a deeper dive into IRMAA planning and minimizing tax on your Social Security benefits. You play a large role in shaping your retirement years in terms of lifestyle and financial health. Think of taking advantage of the many techniques to lower your tax during your retirement years as another aspect of self-care. By treating your financial health and well-being as carefully as you treat your mental and physical well-being, you can ensure that you have resources to attain your financial goals and support yourself in the style for which you’ve planned. In my practice, I see a wide range of client behavior surrounding retirement – from no planning to thoughtful, long-range planning. Looking ahead, whether you’re working with your tax professional and financial team or whether you’re planning on your own, pays off enormously.
Please read on for some additional tips and techniques for tax savings involving charitable giving, Roth IRA conversions, and minimizing capital gains taxes – and two more examples.

Don’t Overpay: Determining the Fair Market Value of Cryptocurrency Airdrops
To the non-crypto enthusiast, the term “airdrop” may conjure an image of a pallet of relief supplies parachuting in from above. In the cryptocurrency world, the term has a very different meaning, but conjures the same mental image.
In the simplest terms, a crypto airdrop is a token that appears in your wallet without being purchased, although in some cases additional actions may be necessary to facilitate the transfer of the asset.
An airdrop can take several different forms, the most basic of which is an unsolicited token that simply shows up in your wallet. This is typically done as a marketing campaign, to try to expand the user base of a new project. Generally, only a nominal amount of the token is distributed.
Many times, this type of airdrop is done maliciously as part of a phishing or dusting attack. The vast majority of these airdrops are unwanted; they function as cryptocurrency’s version of “junk mail.”
Other airdrops are used to reward users of a particular protocol for their past behavior. Typically, this will take the form of a governance token or some other newly minted token.
Occasionally, the new token will automatically be deposited in the recipient’s wallet, but most of the time the user will need to connect their wallet to a website and actively claim the reward.
You may also be required to pay a gas fee to enable the transfer. Many airdrops of this type contain tokens of substantial value, so proper determination of when receipt takes place and what the fair market value (FMV) is can have considerable impact to tax.
While the two previous examples are the most common form of airdrops, they are not limited to the above. In practice, any unsolicited token received is generally considered an airdrop. This can also apply to non-fungible token (NFT) and game-based environments.
Small differences in the facts and circumstances of the airdrop may have outsized impacts on taxability and your planning opportunities. Keep reading to learn more.

Just Good Business – Develop or Review Your Employee Handbook
An employee handbook is usually designed to cover everything a new hire needs to know to get started at their job. Depending on the size of the company “everything a new hire needs to know” can be either a vast amount of information or a much smaller amount. Many small, closely held businesses may not have an employee handbook because they don’t feel they are large enough to warrant it or they (mistakenly) believe that necessary information is getting communicated effectively and consistently to all staff members. Often having an employee handbook isn’t something most businesses think about until it’s too late (for example, when an employee files a lawsuit for discrimination or a worker’s compensation claim). Even businesses that have an employee handbook may not give it much thought once it has been developed. But developing and maintaining a useful employee handbook is just good business. Why? The employee handbook explains a company’s culture and values and is a valuable reference tool for employees looking for information on company policies. It can save management time (and money) and can help to prevent or mitigate legal issues for the company.