06 Feb 2020
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Tax Deductibility of Home Office Expenses

Roger Rossmeisl, CPA
Individual Tax Briefs
Tax Deductibility of Home Office Expenses

Technology has made it easier to work from home so lots of people now commute each morning to an office down the hall. However, just because you have a home office space doesn’t mean you can deduct expenses associated with it. What are the rules for tax deductibility of home office expenses? Regularly and exclusively In order to be deductible for 2019 and 2020, you must be self-employed and the space must be used regularly (not just occasionally) and exclusively for business purposes. If, for example, your home office is also a guest bedroom or your children do their homework there, you can’t deduct the expenses associated with the space. Two options If you qualify, the home office deduction can be a valuable tax break. There are two options...

31 Jan 2020
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Tax Implications of Your Side Gig

Roger Rossmeisl, CPA
Individual Tax Briefs
Tax Implications of Your Side Gig

The number of people engaged in the “gig” or sharing economy has grown in recent years, according to a 2019 IRS report. But what are the tax implications of your side gig?  I'm talking about people who perform these jobs, such as providing car rides, renting spare bedrooms, delivering food, walking dogs or providing other services. Basically, if you receive income from one of the online platforms offering goods and services, it’s generally taxable. That’s true even if the income comes from a side job and even if you don’t receive an income statement reporting the amount of money you made. IRS report details The IRS recently released a report examining two decades of tax returns and titled “Is Gig Work Replacing Traditional Employment?” It found that “alternative,...

26 Jan 2020
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Adoption Related Tax Savings

Roger Rossmeisl, CPA
Individual Tax Briefs
Adoption Related Tax Savings

If you’re adopting a child, or you adopted one this year, there may be adoption related tax savings available to offset the expenses. For 2019, adoptive parents may be able to claim a nonrefundable credit against their federal tax for up to $14,080 of “qualified adoption expenses” for each adopted child. (This amount is increasing to $14,300 for 2020.) That’s a dollar-for-dollar reduction of tax — the equivalent, for someone in the 24% marginal tax bracket, of a deduction of over $50,000. Adoptive parents may also be able to exclude from their gross income up to $14,080 for 2019 ($14,300 for 2020) of qualified adoption expenses paid by an employer under an adoption assistance program. Both the credit and the exclusion are phased out if the...

18 Jan 2020
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What Does it Take to Get a Medical Expense Tax Deduction

Roger Rossmeisl, CPA
Individual Tax Briefs
What Does it Take to Get a Medical Expense Tax Deduction

As we all know, medical services and prescription drugs are expensive. You may be able to deduct some of your expenses on your tax return but the rules make it difficult for many people to qualify. However, with proper planning, you may be able to time discretionary expenses to your advantage for medical expense tax deduction purposes. The medical expense tax deduction: basic rules For 2019, the medical expense deduction can only be claimed to the extent your unreimbursed costs exceed 10% of your adjusted gross income (AGI). You also must itemize deductions on your return. If your total itemized deductions for 2019 o 2020 will exceed your standard deduction, moving or “bunching” nonurgent medical procedures and other controllable expenses into one tax year may allow you to...

12 Jan 2020
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What is Your Taxpayer Filing Status?

Roger Rossmeisl, CPA
Individual Tax Briefs
What is Your Taxpayer Filing Status?

For tax purposes, December 31 means more than New Year’s Eve celebrations. It affects your taxpayer filing status . . . the filing status box that will be checked on your tax return for the year. When you file your return, you do so with one of five filing statuses, which depend in part on whether you’re married or unmarried on December 31. More than one filing status may apply, and you can use the one that saves the most tax. It’s also possible that your status options could change during the year. Here are the filing statuses and who can claim them: Single. This status is generally used if you’re unmarried, divorced or legally separated under a divorce or separate maintenance decree governed by state law. ...

27 Dec 2019
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Using an ABLE Account to Save for a Disabled Family Member

Roger Rossmeisl, CPA
Individual Tax Briefs
Using an ABLE Account to Save for a Disabled Family Member

There’s a tax-advantaged way for people to save for the needs of family members with disabilities — without having them lose eligibility for government benefits to which they’re entitled. It can be done using an ABLE account to save.  An Achieving a Better Life Experience (ABLE) account, which is a tax-free account that can be used for disability-related expenses. Eligibility ABLE accounts can be created by eligible individuals to support themselves, by family members to support their dependents, or by guardians for the benefit of the individuals for whom they’re responsible. Eligible individuals must be blind or disabled — and must have become so before turning age 26. They also must be entitled to benefits under the Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) programs....

27 Dec 2019
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Qualified IRA Charitable Distributions Alternative to Taxable RMDs

Roger Rossmeisl, CPA
Individual Tax Briefs
IRA Charitable Donations

Are you charitably minded and have a significant amount of money in an IRA? If you’re age 70½ or older, and don’t need the money from required minimum distributions, you may benefit by giving these amounts to charity.  They're called Qualified IRA Charitable Distributions (QCDs). IRA distribution basics A popular way to transfer IRA assets to charity is through a tax provision that allows IRA owners who are 70½ or older to give up to $100,000 per year of their IRA distributions to charity. These distributions are called qualified charitable distributions, or QCDs. The money given to charity counts toward the donor’s required minimum distributions (RMDs), but doesn’t increase the donor’s adjusted gross income or generate a tax bill. So while QCDs are exempt from federal income taxes,...

23 Dec 2019
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Using Your 401k Plan to Save

Roger Rossmeisl, CPA
Individual Tax Briefs
Using Your 401(k) Plan to Save

You can reduce taxes and save for retirement by contributing to a tax-advantaged retirement plan. If your employer offers a 401k or Roth 401k plan, contributing to it is a taxwise way to build a nest egg. If you’re not already contributing the maximum allowed, consider increasing your contribution rate between now and year end. Because of tax-deferred compounding (tax-free in the case of Roth accounts), boosting contributions sooner rather than later can have a significant impact on the size of your nest egg at retirement. With a 401k, an employee elects to have a certain amount of pay deferred and contributed by an employer on his or her behalf to the plan. The contribution limit for 2019 is $19,000. Employees age 50 or older by year...

10 Dec 2019
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3 Last Minute Tips That May Help Trim Your Tax Bill

Roger Rossmeisl, CPA
Individual Tax Briefs
3 Last Minute Tips that May Help Trim Your Tax Bill

If you’re starting to fret about your 2019 tax bill, there’s good news — you may still have time to trim your tax bill for 2019. Three strategies are available that may help you cut your taxes before year-end, including: 1. Accelerate deductions/defer income Certain tax deductions are claimed for the year of payment, such as the mortgage interest deduction. So, if you make your January 2020 payment this month, you can deduct the interest portion on your 2019 tax return (assuming you itemize). Pushing income into the new year also will reduce your taxable income. If you’re expecting a bonus at work, for example, and you don’t want the income this year, ask if your employer can hold off on paying it until January. If you’re self-employed,...

04 Dec 2019
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Avoid the Wash Sale Rule When Selling Securities

Roger Rossmeisl, CPA
Individual Tax Briefs
Avoid the Wash Sale Rule When Selling Securities

If you’re planning to sell assets at a loss to offset gains that have been realized during the year, it’s important to be aware of, and avoid the wash sale rule. Avoid the wash sale rule: How the rule works Under this rule, if you sell stock or securities for a loss and buy substantially identical stock or securities back within the 30-day period before or after the sale date, the loss can’t be claimed for tax purposes. The rule is designed to prevent taxpayers from using the tax benefit of a loss without parting with ownership in any significant way. Note that the rule applies to a 30-day period before or after the sale date to prevent “buying the stock back” before it’s even sold. (If...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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