Tag: IRS

Medical expenses can be costly — and they’re not always covered by insurance. But there may be a silver lining: You may be able to claim an itemized deduction for the amounts you pay for medical, dental and vision care, if you incur enough costs to exceed the applicable threshold for the tax year. Here are the details about this deduction. Raising the Bar on Medical Expense Deductions You can claim an itemized deduction for medical, dental, and vision care… Read more ›

  Recordkeeping is often essential to business operations and automobile dealerships are no exception. Many auto dealerships use the Last-In, First-Out (LIFO) method of inventory accounting. Although the LIFO method can provide significant tax benefits, you must be careful to meet certain tax law requirements. One such requirement that is often overlooked is the need to maintain comprehensive records. There are different LIFO methods for new and used vehicle inventories. For new vehicle inventories, dealerships electing to use the alternative… Read more ›

Taxpayers will soon have access to a resource to protect against tax-related identity theft and the potentially serious outcomes that come with it. Before the next tax filing, the IRS will roll out to each tax filer a six-digit PIN number, as part of its new Identity Protection (IP) PIN opt-in program individuals can use. Participation in the program is voluntary and includes the following features: ●     The IP PIN should be entered onto an electronic tax return when prompted… Read more ›

“I’ll do your family’s dental work for free if you build a deck onto my house.” If you’re in the construction industry, you’ve probably received an offer like this or made a similar offer to someone else in a different line of business. It’s a modern variation of the age-old practice of barter. What makes it especially intriguing in this day and age is the idea that you can exchange services or products with someone without exchanging money. Keep in… Read more ›

Sooner or later, your firm will encounter the issue of buying out a partner. This may be due to the partner’s retirement, death or other reasons. The federal income tax rules for partnership payments to buy out an exiting partner’s interest are tricky, but they also open up tax planning opportunities. The Basic Tax Rules Payments made by a partnership to liquidate (or buy out) an exiting partner’s entire interest are covered by Section 736 of the Internal Revenue Code…. Read more ›

Organizations that are created to provide goods or services exclusively (or primarily) to Section 501(c)(3) organizations (or governmental entities) may think that this purpose is sufficient to also qualify them under tax law. However, providing commercial-type services exclusively to exempt organizations is not by itself an exempt purpose. Much more is required for qualification under the rules of Internal Revenue Code Section 501(c)(3) than just having a mission to assist charitable organizations. Basic Requirements An exemption under tax code Section… Read more ›

It’s difficult for many people to write off medical expenses because of the limits imposed under the tax laws. But you may qualify by including every expense allowed. Some of the qualified procedures may surprise you. For example, most insurance plans won’t cover laser eye surgery, such as radial keratotomy or “Lasik,” because they consider it a cosmetic procedure. But it generally qualifies for a medical deduction and as an expense in a flexible spending account. (The IRS used to… Read more ›

The April tax filing deadline has passed, but that doesn’t mean you should push your taxes out of your mind until next year. Here are three tax-related actions that you should consider taking in the near term (if you filed on time and didn’t file for an extension). Retain the requisite records (2022 taxes) Depending on the specific issue, the IRS has years to audit your tax return so it’s critical to maintain the records you may need to defend… Read more ›

  Let’s say you have an unincorporated sideline activity that you think of as a business, including an activity involving horses. If you have a net loss (deductible expenses exceed revenue) on that activity and you think you can deduct that loss on your personal federal income tax return, think again! In IRS audits and in court cases involving money-losing sidelines, the tax agency frequently argues the activities are hobbies, rather than businesses. Be aware that the federal income tax… Read more ›

Court Determines that an Activity Was Engaged in for Profit Taxpayers who are in business to make a profit can generally deduct related expenses on their tax returns. If the IRS doubts a profit motive exists, it may deem an activity to be a hobby with a limited ability to deduct costs. The burden to prove there’s a profit motive is on the taxpayer. In one recent case, the IRS found a “green” home construction partnership was engaged in for… Read more ›