Business Strategies Archives - Page 14 of 17 - Think Outside the Tax Box

Business Strategies

By Garret Wasny, MA, CMC, CITP/FITP

Harnessing ChatGPT with “BEST WILD”

In the realm of tax research, the journey from traditional methods to the digital age has been transformative. The evolution of AI in this field marks a significant milestone, reshaping how tax professionals approach complex regulations and compliance. This journey began with simple tax software, gradually advancing to more sophisticated AI tools capable of analyzing large datasets and identifying patterns beyond human capability. Today, we stand at a pivotal moment where AI, particularly ChatGPT, is not just an aid but a game-changer in tax research.

Enter "BEST WILD", a revolutionary technique designed specifically for this new era. By integrating the advanced capabilities of ChatGPT, "BEST WILD" offers a systematic approach that transcends traditional boundaries in tax law analysis. This method doesn’t just aid in navigating the complexities of tax regulations; it revolutionizes the process, making it more efficient, accurate, and insightful.


Hire Your Kids and Save Money on Your Taxes

Whether you’re preparing to have kids in the future or already have kids, there are tax strategies available (but often overlooked) that you should take advantage of. These are proven ways to save you money on your tax return. How do I know? Well, I use them myself. Bringing children into this world is a great joy and brings immense satisfaction. It’s important to remember, though, having children is a significant responsibility you should take seriously. From a very early age, you need to begin planning for your financial future to ensure you care for your children. There are 10+ unique ways the wealthy families in this country use their families to “qualify” for deductions that often go unused by the middle class. They go unused, not because the middle class can’t qualify; it’s that they don’t make the time to take proactive steps to prepare themselves. Here are just a few of the things you should know as you begin tax planning for your family.

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How To Report Officer’s Compensation For A Late S Election

Question: If I am making a late S election for a client, how do I handle the fact that the officer received no officer’s compensation throughout the year? One of the biggest areas of audit for an S corporation return Form 1120S is officer’s compensation. The IRS collects and examines data from all returns filed and develops a computerized standard of insufficient compensation. Since this area can result in deficiencies for payroll taxes (Social Security and Medicare) for every dollar of distribution reclassified to wage, tax advisors would be wise to avoid risk factors that might raise the risk of audit on officer’s compensation. By avoiding what resembles unreasonably low compensation, we can help business owners by limiting the number of Forms 1120S without officer’s compensation. However, when making a late S election, what is the rule when officer’s truly have taken no compensation? You might be surprised to learn it isn’t filing a Form 1099. Read on to find out how to reduce the risk of audit, while accurately reporting your first Form 1120S.

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Is Trader Tax Status Worth It?

As we navigate a world with COVID-19, large swings in the stock market have become the norm. Many buy and hold-style investors are more actively managing their portfolios to take advantage of these swings. The IRS has a special trader status for taxpayers who frequently engage in trading. This status includes a special accounting method, not available to the average investor, that can come with substantial tax savings. The status allows an investor to make special deductions and opens the door to a wide range of tax reduction strategies unavailable to the casual investor. However, with potential savings also come risks that could end up costing the taxpayer/trader more than the average investor. Weighing the pros and cons of this status is crucial in minimizing tax liability. The big question for tax planning is this — does obtaining trader tax status result in less tax?

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Why Can’t I Deduct PPP Payroll Expenses?

Question: Given the recent passing of the stimulus law (CAA 2021) permitting a business to deduct payroll expenses paid with Paycheck Protection Program (PPP) funds, how does an S corporation or Partnership basis negatively impact this? I’m hearing that even though the law allows the deduction, some businesses will have suspended losses due to PPP funds. Which is true? Can a business deduct losses from PPP payroll or not?

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PPP Loan Forgiveness: Now What?

It’s finally here! After much political wrangling, Congress and President Trump signed the Consolidated Appropriations Act, 2021 (HR 133) into law on December 27, 2020. Attached to this omnibus spending bill were a number of unrelated pieces of legislation, including the latest COVID-19 relief and stimulus measures. The law puts much needed cash in the hands of business owners and individuals alike, while Congress thumbs its collective nose at the IRS by including an override of the recent notice disallowing the deduction of expenses paid for using PPP funds. Several more key provisions in the new legislation’s Division N include process simplification and forgiveness for PPP borrowers, which will make life easier for everybody. To find out how to qualify for new rounds of stimulus, automatic forgiveness, and how to get both tax credits and free money, keep reading.

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Can I “Nominee” Income From a Schedule C to Another Return?

I have a few physician clients who earn their income via Form 1099 and are perfect candidates for an S corporation. However, the hospital won’t issue the Form 1099 in the name/EIN of an S corporation. Is this an issue? Can I still report the income on the Form 1120S and report the Form 1099 on a Schedule C with a negative adjustment for the same amount and attach an explanation annually? Or is there any other way?

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COVID Tax Relief Allows Companies to Make Tax-Free COVID-19 Payments to Employees

For a business owner, almost nothing in life is more uncertain than running a company during a pandemic. Like most people, worry about your own livelihood, family, friends, and loved ones and how you’ll cope during COVID-19 is at the top of your mind. But unlike others, you’ve got the added concern about your employees – both for their health and safety, as well as their financial health. While the government made some relief available in the earlier days of the pandemic such as forgivable loans like the Paycheck Protection Program (PPP) and Emergency Injury Disaster Loans (EIDL) one of the biggest benefits provided has to do with a little known tax provision to the tax law. This provision makes it possible to provide certain payments without tax during a terrorist attack or disaster, but if it weren’t for a certain interpretation of President Trump’s declaration in March 2020, this benefit wouldn’t exist for COVID-19.

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How to Pay Less Tax on S Corporation Distributions

Most taxpayers understand that having an S corporation often eliminates the so-called “double tax” issue C corporations pose. However, the majority of S corporations begin as C corporations and the activity that occurred during the time it was a C corporation will determine how and when to tax distributions from the S corporation. C corporations cannot avoid double taxation on profits simply by electing to be treated as an S corporation (yet there are many other ways to save this double tax on C corporations, stay subscribed to learn about them). Withdrawing C corporation profits even when it later becomes an S corporation can create an extra tax. Here’s how to avoid that.

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