KAFM Money Tips - Buying Your First Home with Vicki Chandler

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February Tax Saving Tips

Tax-Saving Tips February 2019
IRS Issues Final Section 199A Regulations and Defines QBI Your ownership of a pass-through trade or business can generate a Section 199A tax deduction of up to 20 percent of your qualified business income (QBI). The C corporation does not generate this deduction, but the proprietorship, partnership, S corporation, and certain trusts, estates, and rental properties do.
The tax code says QBI includes the net dollar amount of qualified items of income, gain, deduction, and loss with respect to any qualified trade or business of the taxpayer.
Sole Proprietorship QBI
The QBI for the sole proprietor begins with your net business profit as shown on your Schedule C. You then adjust that profit as follows:
·Subtract the deduction for self-employed health insurance. ·Subtract the deduction for one-half of the self-employment tax. ·Subtract qualified retirement plan deductions. ·Subtract Section 1231 net losses (ignore gains).
Example. You have $120,000 of net income on Sche…
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Tax-Saving Tips - June 2019

Tax-Saving Tips June 2019
Combine Home Sale with the 1031 Exchange You don’t often get the opportunity to even consider making a tax-saving double play. But your personal residence combined with a desire for a rental property can provide just such an opportunity.
The tax-saving strategy is to combine the tax-avoidance advantage of the principal residence gain exclusion break with the tax-deferral advantage of a Section 1031 like-kind exchange. With proper planning, you can accomplish this tax-saving double play with full IRS approval.
The double play is available if you can arrange a property exchange that satisfies the requirements for both the principal residence gain exclusion break, and tax deferral under the Section 1031 like-kind exchange rules.
The kicker is that tax-deferred Section 1031 exchange treatment is allowed only when both the relinquished property (what you give up in the exchange) and the replacement property (what you acquire in the exchange) are used for business or i…
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Tax-Saving Tips - July 2019

Tax-Saving Tips July 2019
Proven Tax Reduction Strategies for Sole Proprietors If you operate your business as a sole proprietorship, there are many strategies to reduce your taxes.
Let’s start with the following 10: Use the Section 105 plan to make your health insurance a tax-favored business deduction on your Schedule C.Employ your under-age-18 child to make taxable income disappear.Employ your spouse without paying him or her a W-2 wage.Rent your office, even your home office, from your spouse to save self-employment taxes.Establish that an office in your home is your principal office to increase (yes, increase!) your vehicle deductions and also turn personal home expenses into business expenses.Give yourself flowers, fruit, and books as tax-deductible fringe benefits.Combine the home office and a heavy SUV, crossover vehicle, or pickup truck to grab big deductions this year.Design a business trip that includes some personal days—days you tre…
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