None of us wants to pay more tax than required by law. You’ve probably read or heard of various tax deductions or credits, but how do you know which ones are legitimate and whether they actually apply to you? Instead of taking the time to study the tax code, treasury regulations, and court cases, as well as take regular courses to learn how to apply them, just to talk to someone who already has, who can answer your questions and provide solutions for your situation.
Some tax-saving strategies may require changes to how you do things, while others may simply be a matter of paperwork. However, once the year is over there aren’t many things that can be done to change the outcome (although there may be a few). Tax planning during the year, and especially when starting a new business, can save you thousands.
Some examples of common questions I get asked are below. Many of the answers are, “it depends,” meaning there are tax planning opportunities, which can turn into savings if implemented the right way and at the right time.
- Business entities. Should I form a LLC? How does that affect my taxes?
- Business use of home. When can you deduct it? Should you use the traditional method or the simplified method?
- Charitable donations. Is there a limit on non-cash donations? What records do I need?
- Hiring family members. Should I hire my spouse or kids? What employee benefits can I give them (or myself)?
- Employer expenses. If I have job expenses that aren’t reimbursed, what and how much can I deduct?
- Medical expenses. Are they deductible? What about mileage? Are my insurance premiums deductible if they’re not through my employer?
- Mileage. What miles are deductible? Should I use the standard mileage rate or my actual expenses? What’s the easiest way to track mileage?
- Meals & entertainment. What qualifies a meal as business? How should I document these expenses?
- Real estate. When should I do a like-kind exchange? When is my income taxed at capital gains rates vs. ordinary tax rates? How does depreciation work?
- Retirement. Should I choose Roth or Traditional? If I’m self-employed, should I have a SEP IRA or a Solo 401(k), or something else?
- Self-employment taxes. How much should I save for taxes? Can I reduce my taxes without spending money?
- Travel expenses. Can I deduct my trip if I conduct business? What expenses are deductible? Can I use per diem rates to deduct more than I even spent?