Showing posts from January, 2021

Home-Office Deduction—Show Me the Proof!

Question. If you have an office outside your personal home—say, downtown—can you have a tax-deductible office inside your home for the same trade or business? Answer. Yes. Q. Who says that? A. The IRS and lawmakers! Q . Show me where they say that! Have you ever been down this road with the office-in-the-home deduction? We have. That’s what prompted this article. We have had many requests from tax professionals and business owners demanding, “Show me where it says that!” What IRS Publications Say Let’s start with some quotes from IRS publications that show you how the IRS views the office-in-the-home deduction when you also have an office outside the home for the same business. Here’s the basic rule that makes this work: the office inside the home is going to qualify for the home-office deduction when you make it an administrative office for your business. And this is true regardless of how you operate your business—whether as a proprietorship, single-member LLC

Round 2: Additional Tax-Free PPP Money for You?

Did you receive money from a lender under the existing Paycheck Protection Program (PPP)? If so, you may qualify for more tax-free money. But first, let’s clarify what’s happening. When you think of the PPP program, do you think “tax-free money” or do you think “loan”? Think “tax-free money.” That’s what it is. And it’s easy. Sure, it comes in the form of a loan, and you could be under the mistaken impression that you have to pay it back —but you don’t. You just have to use 60 percent or more of it for defined or deemed payroll. That’s good news part 1. In good news part 2, the expenses you pay with the forgiven PPP monies are tax-deductible. It’s the perfect deal. Take advantage if you can. How Do You Qualify for the New Second-Draw PPP Money? Planning note. This article is about “second-draw” PPP money. Lawmakers set aside $35 billion for those who had not previously received a PPP infusion of tax-free money.  Also, keep this in mind: If you obtain your first PPP mon

New PPP Forgiveness Rules for Past, Current, and New PPP Money

A new law makes the already terrific Paycheck Protection Program (PPP) better for everyone. It clarifies that the PPP money is tax-free and that expenses paid with the money are deductible. This applies retroactively to the inception of the CARES Act on March 27, 2020, so it benefits past PPP loans, current PPP loans that are outstanding, and new loans. Good news. The new Paycheck Protection Program (PPP) law enacted with the stimulus package adds dollars to your pockets if you have or had PPP money. Further, if you are going to apply for PPP money for the first time, the favorable rules in this article apply to your newfound tax-free money. Before we go further, please note the PPP money comes to you in what appears to be a loan. We say “appears” because you typically pay back a loan. But done right the PPP loan is 100 percent forgiven. The word “loan” makes some businesses leery of this arrangement. Don’t be. The PPP monetary arrangement is a true “have your cake and eat it

Tax Considerations When a Loved One Passes Away (Part 1)

A financially comfortable loved one has passed away. In this year of seemingly endless bad news, sadly, that’s not an uncommon situation. The now-deceased loved one may have been single or married, and may or may not have been a relative. In any case, you’ve stepped up to the plate and taken on the challenging job of acting as executor for the deceased person’s estate. Good for you. But it can be a lot of work, and handling tax matters is an important part of it. This article is the first of our three-part series on what you, as the executor, need to know about the most important federal tax issues. So please read this, and then stay tuned for Parts 2 and 3. Key point. There may be state tax issues too, but those are beyond the scope of our analysis. The Executor’s Role When a loved one passes away, someone must handle the resulting financial fallout, including the tax issues. That person may be identified in the “decedent’s” (the deceased loved one’s) will as the executor o

PPP Alert: New Shot for Your Tax-Free Cash

  PPP Alert: New Shot for Your Tax-Free Cash  Did you miss out on the first two opportunities to receive your tax-free Paycheck Protection Program (PPP) cash? Many did miss out. Why? One reason: the word “loan.” Who wants a loan? No one. Well, almost no one. But who wants a cash gift, tax-free? If you do, read on for the details. But first, you should know that the big picture works like this:       You obtain your PPP tax-free monies from a lender (it’s called a “loan,” but watch that word disappear as you read this article).       You spend all the PPP money on yourself if you are self-employed or operate as a partnership; on payroll (including pay to you, if that applies); and on other covered expenses such as rent, interest, utilities, operations, property damage, suppliers, and worker protection.       You apply for loan forgiveness and achieve 100 percent loan forgiveness, which is easy-peasy when you spend 60 percent or more of the money on payroll (and yourself if y