The IRS is offering some updated rules as guidance for deductible expenses that may have been murky as a result of the Tax Cuts and Jobs Act. The rules being updated involve using optional standard mileage rates when figuring the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes, among other issues.
The Tax Cuts and Jobs Act made changes to deductions for meals. In fact, it eliminated the deduction for any expenses related to activities that used to be considered entertainment, amusement or recreation.
"In this world, nothing can be said to be certain, except death and taxes" is a quote often attributed to Benjamin Franklin. With that in mind, it's best to be prepared, at least financially, for taxes and tax season each year.
The new QBI deduction, created by the 2017 tax reform law, allows many owners of sole proprietorships, partnerships, S corporations, trusts, or estates to deduct up to 20 percent of their qualified business income. Eligible taxpayers can also deduct up to 20 percent of their qualified real estate investment trust (REIT) dividends and publicly traded partnership income.
Can you deduct medical and dental expenses? That's a complicated question. To start with, your deductions must exceed 7.5 percent of your adjusted gross income. And they have to fall into an IRS-approved category.
The Internal Revenue Service has issued guidance on the business expense deduction for meals and entertainment following law changes in the Tax Cuts and Jobs Act.
The 2017 TCJA eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation.
If you use part of your home for business, you may be able to deduct expenses for the business use of your home. The home office deduction is available for homeowners and renters, and applies to all types of homes. There are basically two methods for deducting the portion you use for business: the simplified method and the regular method.
Contrary to early reports, the Tax Cuts and Jobs Act of 2017 allows taxpayers who buy, build or substantially improve their homes using either a home equity loan, home equity lines of credit (HELOC) or second mortgages to deduct interest on the loans. That's the good news. But if you take out the loan to pay for personal living expenses—credit card debt, for instance—you can't deduct the interest from your taxes.
A net operating loss refers to a tax year in which a business's allowable tax deductions exceed its taxable income. In simpler terms, you had more expenses than you actually had revenue. However, there is a loophole: U.S. Code IRC § 172 allows businesses to use that loss as a carryover toward future tax years or as a carryback to recoup money from previous tax years. Calculating and taking advantage of an NOL can be hugely beneficial to your business if you need money fast. An NOL can offer you a quick tax refund, but you must be up to date on the rules and regulations of this tax relief.
Want to reduce taxable income and the dough you have to fork over to the IRS? You may not have considered some work expenses — uniforms, for example — that fall under the category of miscellaneous deductions. So here's the deal: Itemize deductions rather than take the standard deduction. Let's see how this works:
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