Deducting Charitable Gifts Depends on a Variety of Factors

Whether you’re planning to claim charitable deductions on your tax return or make donations this year, be sure you know how much you’re allowed to deduct. Your deduction depends on more than just the actual amount you donate. What You Give Among the biggest factors affecting your deduction is what you give. For example: Cash or ordinary-income property. You may deduct the amount of gifts made by check, credit card, or payroll deduction. For stocks and bonds held one year or less, inventory, and property subject…

Did you repair or improve business property?

Repairs to tangible property, such as buildings, machinery, equipment or vehicles, can provide businesses a valuable current tax deduction — as long as the so-called repairs weren’t actually “improvements.” The costs of incidental repairs and maintenance can be immediately expensed and deducted on the current year’s income tax return. But costs incurred to improve tangible property must be capitalized and recovered through depreciation. Betterment, Restoration or Adaptation Generally, a cost must be depreciated if it results in an improvement to a building structure, or any…

Deducting Qualified Business Income

The TCJA created a new deduction for small business owners who operate pass-through entities. That includes domestic companies operated as sole proprietorships or through S corporations, partnerships, certain LLCs, trusts, and estates. Income from such entities may allow business owners to deduct 20% of their qualified business income (QBI). On the surface, the deduction may seem straightforward. Example 1: Laurie Wilson runs her website design company as a sole proprietorship. In 2019, her net income from this business is $100,000. Laurie can take a $20,000…

Retiree’s Charitable Contributions Could Offer Income Tax Reduction

  As the filing season for 2018 tax returns reaches a peak, many people will learn that they’re no longer itemizing deductions. The TCJA placed limits on some deductions and increased the standard deduction significantly, so most taxpayers are taking the standard deduction, rather than itemizing. One result is that charitable contributions offer no direct tax benefit for many donors. An indirect benefit may be available for people who are 70½ or older. They can take qualified charitable distributions (QCDs) from their IRAs and effectively…

Are you considering forming a C Corp?

Many owners of private companies have been leery of operating as a regular C corporation. If you make that choice, you will be exposed to double-taxation of business income. First, a corporate income tax applies to the company’s profits. Second, any dividends that pass to you and other shareholders will be subject to personal income taxes. Making matters even more expensive, your C corporation won’t get an income tax deduction for the dividends it pays out. Tax Pain Relief The Tax Cuts and Jobs Act…