KAFM Money Tips: Home Remodeling

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Tax-Saving Tips: December 2021

  Tax Credits for Schedule C Businesses without Employees   Obtaining a tax credit is the next best thing to paying no taxes at all.   The tax code contains over 30 non-refundable tax credits for businesses. These are part of the general business tax credit and are claimed on IRS Form 3800, General Business Tax Credit, and on Schedule 3 of Form 1040. The general business credit is not itself a tax credit, but rather an overall limitation on the total credits that a business can claim each year.   What if you’re a Schedule C business owner who doesn’t have employees and isn’t involved in one of the niche businesses that come with a credit? You’re not necessarily left out of the tax credit bonanza. Here are six tax credits that many Schedule C businesses with no employees can claim (and of course, you can qualify for these credits with employees, too).   1.      Credit for Increasing Research Activities   The credit for increasing research activities is intended to en
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Tax-Savings Tip: January 2022

  Is Your Sideline Activity a Business or a Hobby?   Do you have a sideline activity that you think of as a business?   From this sideline activity, are you claiming tax losses on your Form 1040? Will the IRS consider your sideline a business and allow your loss deductions?   The IRS likes to claim that money-losing sideline activities are hobbies rather than businesses. The federal income tax rules for hobbies have been anti-taxpayer for years, and now an unfavorable change enacted in the Tax Cuts and Jobs Act (TCJA) made things even worse for 2018-2025.   If you have such an activity, we should have your attention.   Here’s the deal: if you can show a profit motive for your now-money-losing sideline activity, you can classify that activity as a business for tax purposes and deduct the losses.   Factors that can prove (or disprove) such intent include:   ·          Conducting the activity in a business-like manner by keeping good records and searching for
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Tax Savings Tips: November 2021

  2021 Year-End Tax-Planning Edition 2021 Last-Minute Year-End General Business Income Tax Deductions   Your goal should be to get the IRS to owe you money. Of course, the IRS is not likely to cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you pay less in taxes.   Here are six powerful business tax-deduction strategies that you can easily understand and implement before the end of 2021.   1. Prepay Expenses Using the IRS Safe Harbor   You just have to thank the IRS for its tax-deduction safe harbors. IRS regulations contain a safe-harbor rule that allows cash-basis taxpayers to prepay and deduct qualifying expenses up to 12 months in advance without challenge, adjustment, or change by the IRS.   Under this safe harbor, your 2021 prepayments cannot go into 2023. This makes sense, because you can prepay only 12 months of qualifying expenses under the safe-harbor rule.   For a cash-basis t
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