The Tax Professionals Blog
Health Savings Account (HSA) as a Retirement Plan
Posted by Lee Reams Sr. on
Health Savings Accounts (HSAs) are an oft-overlooked stratagem in retirement planning. Individuals with high-deductible health insurance plans can establish an HAS and make tax-deductible contributions to it. Congress created these plans to help individuals pay for medical expenses not covered by insurance. HSAs allow tax-free distributions to pay for unreimbursed medical expenses. Distributions taken that are not used to pay for unreimbursed medical expenses are taxable and subject to a 20% non-qualified distribution penalty. However, the 20% penalty no longer applies after reaching age 65.
Business Use Of Car - Standard Mileage Rate Add-Ons
Posted by Lee Reams Sr. on
Business owners quite often use the standard mileage rate instead of actual expenses when taking a deduction for the business use of their vehicle. The standard mileage rate is determined annually by the IRS using data from a study conducted by an independent contractor of vehicle-operating expenses based on the prior year’s costs.Home Office, Bonus Depreciation & Sec 179 Considerations
Posted by Lee Reams Sr. on
Where a taxpayer’s Schedule C is negative or close to negative, there are issues that should be considered when claiming the home office, the Sec 179 expense, and the 50% bonus depreciation. Determining which combination produces the best current result while preserving future deductions may require trial and error with combinations in your tax software.When a Repaid Premium Tax Credit Can Be a Medical Deduction
Posted by Lee Reams Sr. on
Where an employer, for any month, offers an employee affordable ACA compliant health insurance, the employee is not qualified for a premium tax credit. However, some taxpayers, not being aware of that restriction, acquired their insurance through the marketplace since it was subsidized by the advance premium tax credit (APTC) and turned out to be less costly than the affordable coverage offered by the employer. Dealing With Self-Rental Property Rules
Posted by Lee Reams Sr. on
Generally, the self-rental rules apply to taxpayers who rent property to a trade or business in which they materially participate. In such cases the income is treated as non-passive and losses as passive. This applies property-by-property even if the properties have been grouped as a single economic activity. However, where the property is the taxpayer’s personal residence and the rental period is less than 15 days during the year, the rental would fall under the vacation home rental rules, and the income would not be included in income and no rental expenses would be allowed.