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Determining the “Basis” in your Residence
The housing market in many parts of the country is strong this spring. If you’re buying or selling a home, you should know how to determine your “basis.” How it works You can claim an itemized deduction on your tax return for real estate taxes and home mortgage interest. Most other home ownership costs can’t [...]
Keep Fraud Out of Your Law Firm
As counterintuitive as it may seem, law firms aren’t immune to criminal activity. Because some firms place enormous pressure on attorneys to produce billable work, they may be particularly vulnerable to fraud. Your firm needs to know what to look for and how to protect itself from potential schemes perpetrated by partners, associates and support [...]
Simple Retirement Savings Options for your Small Business
Are you thinking about setting up a retirement plan for yourself and your employees, but you’re worried about the financial commitment and administrative burdens involved in providing a traditional pension plan? Two simple retirement savings options to consider are a “simplified employee pension” (SEP) or a “savings incentive match plan for employees” (SIMPLE). SEPs are [...]
Being More Productive with the 80/20 Rule
As posted to the FightMediocrity YouTube Channel on 10/24/14 (Run time: 3 min, 52 sec) In this thought provoking clip, FightMediocrity provides a quick review and recommendation of "The 80/20 Principle" by Richard Koch. The unspoken corollary to the 80/20 principle is that little of what we spend our time on actually counts. But by [...]
Revisiting California’s Worker Classification Law AB 5
In 2019, AB 5 was signed into law with an effective date of 1/1/2020. Under AB 5, most workers are presumed to be employees for purposes of the Labor Code, the Unemployment Insurance Code, and for most wage orders of the Industrial Welfare Commission unless a hiring entity satisfies a three-factor test, referred to as [...]
Who Qualifies for “Head of Household” Tax Filing Status
When you file your tax return, you must check one of the following filing statuses: Single, married filing jointly, married filing separately, head of household or qualifying widow(er). Who qualifies for "head of household" tax filing status, which is more favorable than single? To qualify, you must maintain a household, which for more than half [...]
Small Businesses, Big Fraud Risks
It’s not always easy being small. For one thing, small businesses (with fewer than 100 employees) experience higher occupational fraud losses: a median $150,000 vs. $140,000 for larger companies, according to the Association of Certified Fraud Examiners. That’s because they don’t always have the staffing or financial resources to implement fraud-prevention programs. Small businesses are [...]
Tax Advantages of Hiring Your Child at your Small Business
As a business owner, you should be aware that you can save family income and payroll taxes by putting your child on the payroll. Here are some considerations. Shifting business earnings You can turn some of your high-taxed income into tax-free or low-taxed income by shifting some business earnings to a child as wages for [...]
What If You’re Not Ready to File Your 1040 by 5/17/21?
“Tax day” is just around the corner. This year, the deadline for filing 2020 individual tax returns is Monday, May 17, 2021. The IRS postponed the usual April 15 due date due to the COVID-19 pandemic. If you still aren’t ready to file your return, you should request a tax-filing extension. Anyone can request one [...]
“Reasonable Compensation” for C Corporation Business Owners
Owners of incorporated businesses know that there’s a tax advantage to taking money out of a C corporation as compensation rather than as dividends. The reason: A corporation can deduct the salaries and bonuses that it pays executives, but not dividend payments. Thus, if funds are paid as dividends, they’re taxed twice, once to the [...]
Importance of Meeting Tax Return and Payment Deadlines
The May 17 deadline for filing your 2020 individual tax return is coming up soon. It’s important to file and pay your tax return on time to avoid penalties imposed by the IRS. Here are the basic rules. Failure to pay Separate penalties apply for failing to pay and failing to file. The failure-to-pay penalty [...]
Be Careful When Claiming “Made in USA”
Recently, the Federal Trade Commission (FTC) settled a lawsuit with a company it says made false and misleading claims about its consumer products. Specifically, the company advertised on its website and social media accounts that its goods were “Made in USA,” even though most of them were imported. This is a violation of the FTC [...]
ARPA Tax Break May Make Child Care Less Expensive
The new American Rescue Plan Act (ARPA) provides eligible families with an enhanced child and dependent care credit for 2021. This is the credit available for expenses a taxpayer pays for the care of qualifying children under the age of 13 so that the taxpayer can be gainfully employed. Note that a credit reduces your [...]
Update on California Classic Car Smog Exemption Bill AB 220
As posted to Mike Frankovich's YouTube Channel on 4/15/2021 (Run time: 8 min, 47 sec) If you're like me, you have trouble understanding why California continues to make it so difficult to engage is what is one of the most quintessential of California pastimes . . . classic car ownership. Since the smog check exemption [...]
CDTFA Releases Updated Pub 34, Motor Vehicle Dealers
The California Department of Tax and Fee Administration (CDTFA) has updated Publication 34 (Motor Vehicle Dealers), to include 2020 legislation that, effective 1/1/2021, imposes new reporting and payments requirements on certain used vehicle dealers. The new discussion, entitled "Used Vehicle Dealers" (in the section on "Motor Vehicle Sales"), provides in part that effective 1/1/2021, certain [...]
Disclaimer
This blog is designed to provide competent and reliable information regarding the subject matter covered. However, it is being provided with the understanding that the blogmaster is not engaged in rendering investment advice. Laws and practices often vary from state to state and if investment assistance is required, the services of a licensed investment professional should be sought. The blogmaster resolutely encourages the reader/viewer to do their own research and due diligence before acting on any information contained herein. As such, Roger Rossmeisl specifically disclaims any liability that is incurred from the use or application of the contents of this blog. It should also be noted that the views contained in this blog are not necessarily representative of the opinions/beliefs of the other owners, management and/or employees of Kho & Patel CPAs.
