Guest Article

First, you need to get an EIN, then get an LLC, establish business credit, and then you can buy a car in your business name. That process may get you a new car but that does not make it a business expense or eligible for a credit. Friends, that is not how this works; that is not how any of this works. I’ve noticed a recent obsession in the online business world with writing off car expenses. Especially clean vehicles since President Biden signed the Inflation Reduction Act in August. There is a correct way to do so, and then, there are a variety of ways to do it incorrectly. If you don’t believe me, just scroll through TikTok and Instagram, it will make your head hurt. Misinterpretations of Section 179 have set the internet ablaze. That is why I want to make sure we set the record straight on how the clean vehicle credit can benefit businesses. That is if your client follows the guidelines set by the IRS. *Hint, hint: It requires more than buying the car in your business name using your business credit. Let’s look at the amendments and additions to the IRC that make this credit valuable to business owners too. You have an opportunity to help your clients save $7,500 to $40,000 when they buy a qualifying clean commercial vehicle from now until December 31, 2032.

Many of the same tax advantages perceived as being only available with entity taxation are also available to Schedule C sole proprietors and that includes funding retirement plans. It’s perfectly OK to start and continue to run a business as a sole proprietorship filing a Schedule C for when it makes financial and administrative sense to do so. There are a number of advantages to having a retirement account. Of course, when you contribute to a retirement account, you can deduct your contributions from your taxable income. This can result in significant savings come tax time. Additionally, the money in your retirement account grows tax-free. This means that you can potentially earn a lot more on your investment than you would if it were subject to taxation. A retirement account gives you the peace of mind that comes with knowing you have a cushion to fall back on in retirement. No matter what happens in the markets, you will always have access to your retirement savings. This can provide a great deal of security during uncertain economic times. While retirement accounts can be a great way to save for the future, there are also some potential drawbacks to consider. For one thing, retirement accounts often come with strict penalties for early withdrawal. This means that if you need to access your savings before retirement age, you may be subject to significant fees. Additionally, retirement accounts can be complex and confusing, making it difficult to keep track of your progress. While retirement accounts can be a helpful tool for saving, it’s important to be aware of the potential drawbacks before you decide as a sole proprietor whether or not to open one. Click here to explore the different types of retirement plans available to sole proprietors and the pros and cons of each.

The IRS is deploying technology and big data to combat compensation under-reporting. What does this likely mean for you and your S Corps? That Reasonable Compensation challenges will likely occur outside the traditional exam process. A challenge may come from the ongoing Employment Tax Program or the recently launched CIP. From our polling, we find most tax advisors and their S Corp clients are dangerously unprepared for an IRS reasonable compensation challenge. If you are working with S corps, here’s the news you need to know...

The Internal Revenue Service (IRS) mission statement is to "provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all." The IRS provides forms and instructions, publications, robust web-based resources, and other tools to help taxpayers prepare and file their tax returns – an exercise relished by few. But what happens after you file your tax return? For many, the IRS accepts their tax returns as filed and processes them quickly, which is the end of the process. Others get "post-filing" correspondence from the IRS. The IRS may need additional information to process your tax return or, worse, may examine your tax return (asking you to document some or all parts of the return). There's a middle ground where the IRS adjusts your tax return without the "courtesy" of requesting documentation first. These are the math error notices. Read on to discover more (including that it's not always about math).

Evie and I withdrew from active tax practice in 2018, but she maintains a sort of family and friend's freebie practice using Drake. I help a little. We have been struggling with difficulty getting the information for one of our “clients” as we watch the ultimate October 15 deadline creeps up on us. She is in Florida in one of the counties covered by President Biden’s disaster declaration relative to Hurricane Ian. So it was sort of a relief to find out that we have another three months to get the return done. In this case it is not a huge benefit since interest will still clock if there turns out to be a balance due, since the payment was due on April 18. “Certain deadlines” falling on or after September 23, 2022 and before February 15, 2023 are postponed through February 15, 2023. Read on to learn more!

Self-directed IRAs (SDIRAs) have long been a vehicle for less traditional investments that can't be held in a normal IRA, such as precious metals, real estate, or tax liens. Cryptocurrency is the newest addition to that list of alternative retirement savings and has exponentially grown in popularity in recent years. The rules governing SDIRAs are complex, and taxpayers can easily and unknowingly violate the rules, resulting in the entire IRA being deemed distributed and potentially subject to tax. As the famous adage says, "with great [investment] power comes great responsibility." Keep reading to learn more!

The fourth quarter just started and it's time to have your clients take a look at their financial services game plan. With interest rates approaching historic highs now is the time to review financial accounts to ensure high returns on cash investments, optimize reward-bearing accounts, and minimize interest paid and fees for financial products and accounts. The goal of this review is to ensure that investments and rewards programs are tuned for optimal results and to minimize interest and fees throughout next year. I won’t be providing much in the way of specific, prescriptive advice. I am not a registered investment advisor or a certified financial planner, nor do I recommend specific products, services, or institutions (other than a subscription to this publication). Rather, I will be providing a framework for the review, encouraging you to ask good questions about the goals for the various accounts, and reminding you to consider the big picture as well as the role each part plays in it. Let’s get started!

You may know me as the “crypto guy” here at Think Outside the Tax Box. It might seem like that’s all I ever write about. But this time, I’m sneaking an article in while my editor is on vacation. Because I want to talk about using a client portal and why all tax professionals should be using one in their firms. Some firms may have dipped their toe into the digital waters out of necessity as a by-product of the pandemic. Others may have started the process long before Covid existed. According to a completely unscientific poll I ran on Twitter, 70 percent of firms are still processing returns at least partially on paper. This can mean either receiving paper documents from a client or delivering a hard copy of the completed return to the client. As the numbers from a Twitter survey are clearly biased toward firms already comfortable with digital technology, we can safely assume more accurate numbers are significantly higher. Since TOTTB refuses to provide me with a budget to run a full, comprehensive study, we’ll just have to run with my perfunctory data as well as published data from a poll Canopy conducted in 2021. Canopy surveyed more than a thousand small businesses and found that 63 percent admitted that their accountant did not offer any portal. More surprising, depending on whom you ask, is that more than two-thirds of respondents said they would be interested in switching to an accountant that allows them to use photos of their documents for easy sharing. While I’m not here to debate the issues of opening a gajillion .jpg files and how that might negatively affect my practice, the impact of using technology can improve your efficiencies, communications, and improve your workflow. To learn how, continue reading.