While the Tax Cuts and Jobs Act (TCJA) reduces most income tax rates and expands some tax breaks, it limits or eliminates several itemized deductions that have been valuable to many individual taxpayers. Here are five deductions you may see shrink or disappear when you file your 2018 income tax return: State and local tax[ … ]
Tag: deductions
Tagged: deductions
Depreciation-related breaks on business real estate: What you need to know when you file your 2018 return
Commercial buildings and improvements generally are depreciated over 39 years, which essentially means you can deduct a portion of the cost every year over the depreciation period. (Land isn’t depreciable.) But special tax breaks that allow deductions to be taken more quickly are available for certain real estate investments. Some of these were enhanced by[ … ]
Play your tax cards right with gambling wins and losses
If you gamble, be sure you understand the tax consequences. Both wins and losses can affect your income tax bill. And changes under the Tax Cuts and Jobs Act (TCJA) could also have an impact. Wins and taxable income You must report 100% of your gambling winnings as taxable income. The value of complimentary goodies[ … ]
Ensure your year-end donations will be deductible on your 2016 return
Donations to qualified charities are generally fully deductible, and they may be the easiest deductible expense to time to your tax advantage. After all, you control exactly when and how much you give. To ensure your donations will be deductible on your 2016 return, you must make them by year end to qualified charities. When’s[ … ]
Documentation is the key to business expense deductions
If you have incomplete or missing records and get audited by the IRS, your business will likely lose out on valuable deductions. Here are two recent U.S. Tax Court cases that help illustrate the rules for documenting deductions. Case 1: Insufficient records In the first case, the court found that a taxpayer with a consulting[ … ]
Now’s the time to start thinking about “bunching” – miscellaneous itemized deductions, that is
Many expenses that may qualify as miscellaneous itemized deductions are deductible only to the extent they exceed, in aggregate, 2% of your adjusted gross income (AGI). Bunching these expenses into a single year may allow you to exceed this “floor.” So now is a good time to add up your potential deductions to date to[ … ]
To deduct business losses, you may have to prove “material participation”
You can only deduct losses from an S corporation, partnership or LLC if you “materially participate” in the business. If you don’t, your losses are generally “passive” and can only be used to offset income from other passive activities. Any excess passive loss is suspended and must be carried forward to future years. Material participation[ … ]
Deduct home office expenses — if you’re eligible
Today it’s becoming more common to work from home. But just because you have a home office space doesn’t mean you can deduct expenses associated with it. Eligibility requirements If you’re an employee, your use of your home office must be for your employer’s convenience, not just your own. If you’re self-employed, generally your home[ … ]
100% Deduction for Certain M&E Expenses!
Generally, businesses are limited to deducting 50% of allowable meal and entertainment (M&E) expenses. But certain expenses are 100% deductible, including expenses: For food and beverages furnished at the workplace primarily for employees, Treated as employee compensation, That are excludable from employees’ income as de minimis fringe benefits, For recreational or social activities for employees,[ … ]
