New Tax Laws - Linkenheimer LLP CPAs & Advisors

Take a Closer Look at Home Office Deductions

Working from home has its perks. Not only can you skip the commute, but you also might be eligible to deduct home office expenses on your tax return. Deductions for these expenses can save you a bundle, if you meet the tax law qualifications.

Under the Tax Cuts and Jobs Act, employees can no longer claim the home office deduction. If, however, you run a business from your home or are otherwise self-employed and use part of your home for business purposes, the home office deduction may still be available to you.

If you’re a homeowner and use part of your home for business purposes, you may be entitled to deduct a portion of actual expenses such as mortgage, property taxes, utilities, repairs and insurance, as well as depreciation. Or you might be able to claim the simplified home office deduction of $5 per square foot, up to 300 square feet ($1,500).

Requirements to qualify

To qualify for home office deductions, part of your home must be used “regularly and exclusively” as your principal place of business. This is defined as follows:

Regular use. You use a specific area of your […]

By Linkenheimer LLP|2020-09-03T20:03:46+00:00August 6th, 2019|business, deduction, deductions, New Tax Laws|0 Comments

It’s a Good Time to Buy Business Equipment and Other Depreciable Property

There’s good news about the Section 179 depreciation deduction for business property. The election has long provided a tax windfall to businesses, enabling them to claim immediate deductions for qualified assets, instead of taking depreciation deductions over time. And it was increased and expanded by the Tax Cuts and Jobs Act (TCJA).

Even better, the Sec. 179 deduction isn’t the only avenue for immediate tax write-offs for qualified assets. Under the 100% bonus depreciation tax break provided by the TCJA, the entire cost of eligible assets placed in service in 2019 can be written off this year.

Sec. 179 basics

The Sec. 179 deduction applies to tangible personal property such as machinery and equipment purchased for use in a trade or business, and, if the taxpayer elects, qualified real property. It’s generally available on a tax year basis and is subject to a dollar limit.

The annual deduction limit is $1.02 million […]

By Linkenheimer LLP|2020-09-03T20:03:48+00:00July 16th, 2019|bonus, depreciation, New Tax Laws|0 Comments

Volunteering for Charity: Do You Get a Tax Break?

If you’re a volunteer who works for charity, you may be entitled to some tax breaks if you itemize deductions on your tax return. Unfortunately, they may not amount to as much as you think your generosity is worth.

Because donations to charity of cash or property generally are tax deductible for itemizers, it may seem like donations of something more valuable for many people — their time — would also be deductible. However, no tax deduction is allowed for the value of time you spend volunteering or the services you perform for a charitable organization.

It doesn’t matter if the services you provide require significant skills and experience, such as construction, which a charity would have to pay dearly for if it went out and obtained itself. You still don’t get to deduct the value of your time.

However, you potentially can deduct out-of-pocket costs associated with your volunteer work.

The basic […]

By Linkenheimer LLP|2020-09-03T20:03:49+00:00July 9th, 2019|charity, expensing, New Tax Laws, tax|0 Comments

California Gives Veterans a Boost

The CA Employment Development Dept. has awarded $5 million in Veterans’ Employment-Related Assistance Program grants. The grants are expected to help about 1,200 veterans secure jobs. “EDD is proud to provide California veterans with the tools they need to transition into sustainable careers,” said EDD Director Patrick W. Henning. “This funding will help train and prepare former military personnel for high-growth civilian jobs.” Grants will be used in these counties: Contra Costa, Los Angeles, Orange, Riverside, San Diego and Ventura. The funding is part of the federal Workforce Innovation and Opportunity Act. For more info: https://bit.ly/2Xxms9w

By Linkenheimer LLP|2020-09-03T20:03:50+00:00July 3rd, 2019|New Tax Laws|0 Comments

Which Entity is Most Suitable for Your New or Existing Business?

The Tax Cuts and Jobs Act (TCJA) has changed the landscape for business taxpayers. That’s because the law introduced a flat 21% federal income tax rate for C corporations. Under prior law, profitable C corporations paid up to 35%.

The TCJA also cut individual income tax rates, which apply to sole proprietorships and pass-through entities, including partnerships, S corporations, and LLCs (treated as partnerships for tax purposes). However, the top rate dropped from 39.6% to only 37%.

These changes have caused many business owners to ask: What’s the optimal entity choice for me?

Entity tax basics

Before the TCJA, conventional wisdom was that most small businesses should be set up as sole proprietorships or pass-through entities to avoid the double taxation of C corporations. A C corporation pays entity-level income tax and then shareholders pay tax on dividends — and on capital gains when they sell the stock. For pass-through entities, there’s no federal income tax at the entity level.

Although C corporations are still potentially subject to double taxation, their current 21% tax rate helps make up for it. This issue is further complicated, however, by another tax provision that allows noncorporate owners of pass-through […]

By Linkenheimer LLP|2020-09-03T20:03:51+00:00June 28th, 2019|business, New Tax Laws, tax planning|0 Comments