Roger Rossmeisl, CPA, Author at Roger Rossmeisl, CPA

14 Jun 2018

(#332) Putting Your Child on Your Business’s Payroll for the Summer May Make More Tax Sense Than Ever

If you own a business and have a child in high school or college, hiring him or her for the summer can provide a multitude of benefits, including tax savings. And hiring your child may make more sense than ever due to changes under the Tax Cuts and Jobs Act (TCJA). How it works By shifting some of your business earnings to a child as wages for services performed, you can turn some of your high-taxed income into tax-free or low-taxed income. For your business to deduct the wages as a business expense, the work done must be legitimate and the child’s wages must be reasonable. Here’s an example: A sole proprietor is in the 37% tax bracket. He hires his 20-year-old daughter, who’s majoring in marketing,...

14 Jun 2018

(#331) Saving Tax on Restricted Stock Awards with the §83(b) Election

Roger Rossmeisl, CPA

Taxes

Today many employees receive stock-based compensation from their employer as part of their compensation and benefits package. The tax consequences of such compensation can be complex — subject to ordinary-income, capital gains, employment and other taxes. But if you receive restricted stock awards, you might have a tax-saving opportunity in the form of the §83(b) election. Convert ordinary income to long-term capital gains Restricted stock is stock your employer grants you subject to a substantial risk of forfeiture. Income recognition is normally deferred until the stock is no longer subject to that risk (that is, it’s vested) or you sell it. At that time, you pay taxes on the stock’s fair market value (FMV) at your ordinary-income rate. The FMV will be considered FICA income, so it also...

12 Jun 2018

(#330) Sending Your Kids to Day Camp May Provide a Tax Break

Roger Rossmeisl, CPA

Taxes

When school lets out, kids participate in a wide variety of summer activities. If one of the activities your child is involved with is day camp, you might be eligible for a tax credit! Dollar-for-dollar savings Day camp (but not overnight camp) is a qualified expense under the child and dependent care credit, which is worth 20% of qualifying expenses (more if your adjusted gross income is less than $43,000), subject to a cap. For 2018, the maximum expenses allowed for the credit are $3,000 for one qualifying child and $6,000 for two or more. Remember that tax credits are particularly valuable because they reduce your tax liability dollar-for-dollar — $1 of tax credit saves you $1 of taxes. This differs from deductions, which simply reduce the amount...

11 Jun 2018

(#329) “The Crash Course” Chapter 4: Compounding is the Problem

Roger Rossmeisl, CPA

Economic Concepts

As posted on the Peak Prosperity.com and the Chris Martenson's Peak Prosperity YouTube Channel Background The Crash Course has provided millions of viewers with the context for the massive changes now underway, as economic growth as we've known it is ending due to depleting resources. But it also offers real hope. Those individuals who take informed action today, while we still have time, can lower their exposure to these coming trends -- and even discover a better way of life in the process. In this Blog, I am presenting the 27 (inclusive of the introduction) installments of The Crash Course, one per week. Previous installments of "The Crash Course" can be found here: Blog (#311) Introducing "The Crash Course" Blog (#314) Chapter 1: Three Beliefs Blog (#319) Chapter 2: "The Three 'Es'" Blog...

08 Jun 2018

(#328) Attracting Angel Investors

Roger Rossmeisl, CPA

Business Briefs

05 Jun 2018

(#327) TCJA Changes Some Rules for Deducting Pass-Through Business Losses

Roger Rossmeisl, CPA

Taxes

It’s not uncommon for businesses to sometimes generate tax losses. But the losses that can be deducted are limited by tax law in some situations. The Tax Cuts and Jobs Act of 2017 (TCJA) further restricts the amount of losses that sole proprietors, partners, S corporation shareholders and, typically, limited liability company (LLC) members can currently deduct — beginning in 2018. This could negatively impact owners of start-ups and businesses facing adverse conditions. Before the TCJA Under pre-TCJA law, an individual taxpayer’s business losses could usually be fully deducted in the tax year when they arose unless: The passive activity loss (PAL) rules or some other provision of tax law limited that favorable outcome, or The business loss was so large that it exceeded taxable income from...

05 Jun 2018

(#326) Be Aware of the Tax Consequences Before Selling Your Home

Roger Rossmeisl, CPA

Taxes

In many parts of the country, summer is peak season for selling a home. If you’re planning to put your home on the market soon, you’re probably thinking about things like how quickly it will sell and how much you’ll get for it. But don’t neglect to consider the tax consequences. Home sale gain exclusion The U.S. House of Representatives’ original version of the Tax Cuts and Jobs Act of 2017 (TCJA) included a provision tightening the rules for the home sale gain exclusion. Fortunately, that provision didn’t make it into the final version that was signed into law. As a result, if you’re selling your principal residence, there’s still a good chance you’ll be able to exclude up to $250,000 ($500,000 for joint filers) of gain. Gain...

04 Jun 2018

(#325) “The Crash Course” Chapter 3: Exponential Growth

Roger Rossmeisl, CPA

Economic Concepts

04 Jun 2018

(#324) Impact of TCJA on Home Mortgage Interest Deductions

Roger Rossmeisl, CPA

Taxes

The Tax Cuts and Jobs Act of 2017 (TCJA) has caused some changes in the area of home mortgage interest deductions. While a good amount of existing homeowners will not be impacted due to grandfather provisions that keep certain prior-law rules in place, other homeowners will be negatively impacted by a new provision that generally disallows interest deductions for home equity loans for tax years 2018-2025. This Tax Planning Letter outlines what you need to be aware of regarding TCJA’s impact on home mortgage interest deductions. TABLE OF CONTENTS HOME MORTGAGE INTEREST: Pre-TCJA HOME MORTGAGE INTEREST: TCJA "Home acquisition indebtedness" under TCJA "Home equity indebtedness" under TCJA $1 million of "home acquisition indebtedness" grandfather rules under TCJA Taxpayers who can disregard TCJA changes HOME MORTGAGE INTEREST: Pre-TCJA Prior to TCJA, a taxpayer was allowed...

21 May 2018