Business Taxes, Family Taxes, General Information, General Tax Topics, notary, retirement planning, Self Employed, signing agent, Small Business, Tax Deductions, Tax Planning, Tax Reduction, Uncategorized

HUGE WIN FOR NOTARY SIGNING AGENTS

women s in gray turtleneck sweater pointing white contract paper

Author Trudy M. Howard

In our South Loop Chicago Tax Preparation office, Howard Tax Prep LLC works with entrepreneurs from various industries; however, there are 2 industries that give entrepreneurs a built in self-employment tax deduction. To take advantage of built in self employment tax reductions, one must be employed as a minister, or a notary. While this article will deal with notary signing agents, the same concept can also be applied to ministers.

Per IRS publication 17: “Notary public. Report payments for these services on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). These payments aren’t subject to self-employment tax.” ees received for services performed as a notary public. Also, the instructions for IRS schedule SE reads: “if you had no other income subject to SE tax, enter “Exempt—Notary” on Schedule 4 (Form 1040), line 57. Don’t file Schedule SE.”

So how do you know what part of your loan signing agent payments are for notary services only? It’s simple, you count the # of stamps that you made, and exclude your travel, printing, and shipping/faxing cost. For example, let’s say that you have a 30 page loan document, and you charge $80 for the the total signing, $30 of which is strictly for the notary stamps. Using the above example, if you properly DOCUMENT your job, you can exclude the $30 (the charge for each stamp) from self-employment taxes (the 15.3% Medicare & Social Security taxes aka FICA).

newsletter
Although I’m pretty sure that you probably don’t want to do anymore documentation, the IRS requires documentation for deductions, and this is a HUGE deduction! Don’t let the lack of documentation, or lack of tax preparers knowledge keep you from taking advantage of the self employment tax reduction for notaries/signing agents (& ministers). While most tax reduction strategies require the use entities, retirement vehicles, and state laws, this simple yet effective tax deduction only requires you to itemize your notary fees, & document your work. Below, please find a basic example of the potential savings.

$80,000 Signing agent income.
-$20,000 expenses
$60,000 in taxable income.
$60,000 in taxable for self-employment taxes.
Self-employment taxes on $60,00=$8,478
Income taxes assuming single person no children=$4,013  TOTAL TAX BILL=$12,491

$80,000 Signing agent income.
-$20,000 expenses
$60,000 in taxable income.
$30,000 taxable income for self-employment taxes
Self-employment taxes on $30,000=$4,239 EASY TAX SAVINGS OF $4,239.
Income taxes assuming single person no children=$4,013. TOTAL TAX BILL=$8,252

Although we’ve given you the basics, this is not an all-inclusive article. Should you have tax debt help questions, need Chicago business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office toll free at 1-855-743-5765 or locally in Chicago or Indiana at 1-708-529-6604. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.

Schedule-button-nb

Never miss another tip again! Join our newsletter, to receive tax reduction/wealth building tips delivered right to your inbox!

newsletter

Business Taxes, Family Taxes, General Information, General Tax Topics, Self Employed, Small Business, Tax Deductions, Tax Reduction, Uncategorized

Deduct Your Costs of Sponsoring Sports Teams

woman athletes playing soccer

In our south loop Chicago tax preparation office, when we prepare small business tax returns, we are often asked if a company can deduct the costs of sponsoring a sports team. Have you wondered what it takes to deduct the costs of sponsoring a sports team? What if you play on the team? Could you pay for the team travel expenses?

Revenue Ruling 70-393 states that the monies spent to outfit and support a sports team are similar to monies spent on other methods of advertising; accordingly, you may deduct them as business expenses for federal income tax purposes.

In the Strong case, Strong Construction Co. Inc. advertised its business primarily through either word of mouth or athletic sponsorships. As part of the athletic sponsorships, the corporation paid for the uniforms, logo design, hats, T-shirts, sweatpants, coats, bags, and pants for all players on its sponsored teams (broomball, softball, wrestling, etc.). The court ruled that the expenses were ordinary and necessary business expenses and that Strong could deduct them as advertising or promotion.
Schedule-button-nb
In the Bower case, James Bower sponsored the Lafayette Bower Housing Hustlers basketball team, and he was both an assistant coach and a player. As the Hustlers’ sponsor, Bower paid for the team’s travel, lodging, food, promotions, AAU fees, tournament fees, gym rental, and uniforms. The court noted that Bower’s sponsorship increased his commodity brokerage commissions and generated additional clients; accordingly, the court ruled that Bower’s sponsorship expenses were deductible business expenses.

Although we’ve given you the basics, this is not an all-inclusive article. Should you have tax debt help questions, need Chicago business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office toll free at 1-855-743-5765 or locally in Chicago or Indiana at 1-708-529-6604. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.

Schedule-button-nb

Never miss another tip again! Join our newsletter, to receive tax reduction/wealth building tips delivered right to your inbox!

newsletter

Business Taxes, General Information, General Tax Topics, Self Employed, Small Business, Tax Deductions, Uncategorized, Vehicles

Commercial Fuel Card Without A Personal Guarantee.

gas card

Commercial Fuel Card

Gas Cards Without A Personal Guarantee

Would you like to free up some cash so that you can increase your marketing budget, purchase more supplies, or reward your employees? Have you heard about obtaining business credit without a personal guarantee, but haven’t been able to secure your own business credit? Are you a small business owner that has damaged personal credit? Have you been told that you can’t get business credit if you have bad personal credit? If any of these things apply to you, you’ve come to the right place!
To start, let us explain what a “personal guarantee is.” A personal guarantee means that the owners will be held personally liable for the debts of their business. Suppose you have a LLC Howard Tax Prep LLC has partnered with a national gas chain (comparable with Exon Mobil, Citgo, etc. with over 18,000 locations worldwide) to offer small business owners (being defined as businesses with revenues under 1 million dollars) fuel cards that report business payment history to Dunn and Brad Street, and Equifax every 30 days!
bp 2

Only verified businesses that are structured as a LLC, S-Corp, or C-Corp with a Dun and Brad Street number will qualify. Because this is not a publicly marketed program, your business must be verified, prior to receiving the name of the fuel company (but trust us, you can find a station near you).  

The best part about this offer? THE CARDS ARE ISSUED WITHOUT ANY PERSONAL LIABILITY TO THE OWNERS, & WITHOUT THE USE OF THE OWNERS PERSONAL CREDIT. If you need a truck driver fuel card, Uber driver fuel card, Lyft driver fuel card, or just a general small business owner fuel card, we can help! 

WHAT ARE THE DETAILS?

  • National fuel provider. Qualified businesses that are ready to move forward will be given the name of the fuel company prior to paying the 1 time $49.95 Howard Tax Prep LLC processing fee.
  • Minimum deposit of $200 for a $500 credit line is required.
  • Accounts are reviewed every quarter for credit line increases.
  • After 12 months of ON TIME PAYMENTS, your deposit will be returned.

WHAT ARE THE REQUIREMENTS?

  • Business Must Be Structured As A LLC, Corporation, or S-corporation.
  • Must have a BUSINESS CHECKING account.
  • Must Agree To Make ON-TIME Payments.
  • Deposit Payment Can Only Be Drafted From Business Checking account.

Who should use fuel cards?

Owner Operator Truck Driver

image40

Owner Operator Truck Drivers no longer have to use personal credit cards or cash profits to purchase fuel! Reduce driver fraud by setting fuel limits & restricting usage. Save on fuel cost, while building your business credit Paydex score.     

  • The principal or owner is not personally liable for any bad debt.
  • The account will be in the name of the business.
  • Helps to Establish & build business credit.
  • Account payment history reported to DnB and Equifax every 30 days.
  • Accepted at over 18,000 locations Worldwide.
  • Free online invoicing.
  • Activate new cards as needed.
  • Restrict cards with fuel only limits & purchase restrictions during non-business hours.
  • Save up to 6¢/gal* on fuel purchases at thousands of locations in the U.S.
  • Earn rebates on fuel at branded locations.

GET YOUR CARD NOW!

Small Business Owner

image41

Small business owners no more using your profits & personal credit cards to cover fuel cost. Use the cash you save and apply it toward marketing, inventory, and more! Save on fuel cost, while building your business credit Paydex score. 

  • The principal or owner is not personally liable for any bad debt.
  • The account will be in the name of the business.
  • Helps to Establish & build business credit.
  • Account payment history reported to DnB and Equifax every 30 days.
  • Accepted at over 18,000 locations Worldwide.
  • Free online invoicing.
  • Activate new cards as needed.
  • Restrict cards with fuel only limits & purchase restrictions during non-business hours.
  • Save up to 6¢/gal* on fuel purchases at thousands of locations in the U.S.
  • Earn rebates on fuel at branded locations.

GET YOUR CARD NOW! 

Uber & Lyft Driver

image42

Uber and Lyft Drivers that would like to build their business credit, and free up their cash flow. Use your additional cash flow for brake repairs, oil changes, and more! Save on fuel cost, while building your business credit Paydex score.  

  • The principal or owner is not personally liable for any bad debt.
  • The account will be in the name of the business.
  • Helps to Establish & build business credit.
  • Account payment history reported to DnB and Equifax every 30 days.
  • Accepted at over 18,000 locations Worldwide.
  • Free online invoicing.
  • Activate new cards as needed.
  • Restrict cards with fuel only limits & purchase restrictions during non-business hours.
  • Save up to 6¢/gal* on fuel purchases at thousands of locations in the U.S.
  • Earn rebates on fuel at branded locations.

 GET YOUR CARD NOW!  

How easy it to use the card?

image43

 1-2-3 Driver Instructions 

  • Swipe card
  • Enter driver ID when prompted (may also be call DIN or PIN)
  • Enter odometer reading when prompted
  • The principal or owner is not personally liable for any bad debt.
  • The account will be in the name of the business.
  • Helps to Establish & build business credit.
  • Account payment history reported to DnB and Equifax every 30 days.
  • Accepted at over 18,000 locations Worldwide.
  • Free online invoicing.
  • Activate new cards as needed.
  • Restrict cards with fuel only limits & purchase restrictions during non-business hours.
  • Save up to 6¢/gal* on fuel purchases at thousands of locations in the U.S.
  • Earn rebates on fuel at branded locations.

 GET YOUR CARD NOW! 

 

Family Taxes, General Information, General Tax Topics, Tax Deductions, Uncategorized

If You Hear This Advice on How to Cut Your Taxes, Stay Away

young friends

When it comes to tax advice, be careful whom you trust. In our south loop of Chicago tax preparation office, we hear a number of tax tips for small business owners that aren’t based in tax law.

There is some remarkably bad and wrong and hazardous-to-your-health information out there that—despite being repeatedly debunked—just will not go away. Some of those ideas are clearly erroneous, but others can snag even very bright people.

Consider the case of Carter White Rae, a dentist in Michigan. He followed some bad advice and ended up with a bill from the government for over half a million dollars—plus a 45-month jail sentence.

Remember: You may be a logical person, but tax law is not always logical. Even if something makes sense to you—or sounds like it’s the way the law should work—it may still be completely wrong.

That’s why you have me in your corner. And that’s why you should ask me before you take an action that seems too good to be true.

The most dangerous tax strategies are the ones that lead you to believe you do not have to pay any tax at all. Known in IRS lingo as “tax protestor” arguments, they claim that by virtue of little-known quirks in the law or because of never-correctly-ratified amendments, you can somehow sidestep all U.S. tax requirements.

No matter how intricate those arguments can be, they all suffer from the same problem: The IRS and courts reject them. The government has already ruled against them, and if you use one of those arguments, the government will eventually catch up with you and demand its money. It’s a question of when, not if.

Take It from the IRS

The IRS was nice enough to compile a list of arguments that it has heard before and will categorically reject:

  1. The filing of a tax return or the payment of federal income tax is voluntary.
  2. Taxpayers can reduce their federal tax liability by filing a “zero return” that reports zero income and zero tax liability.
  3. Compensation received for personal services isn’t income.
  4. Military retirement pay isn’t income.
  5. Only foreign-source income is taxable.
  6. The IRS isn’t a U.S. agency.
  7. The taxpayer isn’t a citizen and therefore isn’t subject to federal income taxes.
  8. The taxpayer isn’t a “person” under the tax law and therefore isn’t subject to federal income taxes.
  9. Various constitutional amendments permit the taxpayer to avoid taxes.
  10. Form 1040’s instructions and regulations don’t have an OMB control number as required by the federal Paperwork Reduction Act.

Penalties and Prison

The IRS believes that tax protestor claims are “frivolous” and will have no mercy on you if you rely on one to avoid paying taxes. The courts tend to agree and uphold those penalties—and sometimes impose prison time as well.

Whenever you “willfully attempt to evade or defeat” your taxes, you’re looking at fines of up to $100,000 ($500,000 for corporations) and prison time of up to five years. That’s on top of having to pay the taxes due, the prosecution’s costs, and any other penalties.

How to Spot Bad Strategies

With tax law as complicated as it is, how are you supposed to tell the difference between a legitimate tax reduction strategy and a baseless idea that will get you in trouble?

The main problem with tax protestor arguments is that they claim to let you ignore the plain language of the law—simply by saying that the IRS isn’t legitimate or that you aren’t subject to the rules.

Real tax strategies work within the law, finding deductions or ways to reduce your income that the tax code or IRS have explicitly blessed—rather than going around the law or ignoring it.

Although we’ve given you the basics, this is not an all-inclusive article. Should you have tax debt help questions, need Chicago business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office toll free at 1-855-743-5765 or locally in Chicago or Indiana at 1-708-529-6604. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.

Schedule-button-nb

Never miss another tip again! Join our newsletter, to receive tax reduction/wealth building tips delivered right to your inbox!

newsletter

Business Taxes, General Information, General Tax Topics, Self Employed, Small Business, Tax Deductions, Uncategorized

How the 90-Day Mileage Log Rule Works for You

fashion woman notebook pen

Often in an IRS audit, the examiner will ask for your mileage log at the beginning of the audit. If you do not have a mileage log, then you are in danger of losing more than just vehicle deductions. Think about it. If you don’t have a log for mileage, what is the IRS examiner going to think about your other records? Right—he or she is going to think you are a bad taxpayer with bad tax records who needs extra scrutiny.

The IRS says that you may keep an adequate record for part of a tax year and use that part-year record to substantiate your vehicle’s business use for the entire year. To use a sample record, you need to prove that your sample is representative of your use for the year.

By using your appointment book as the basis for your mileage, you not only build great business-use proof, but you also do a great job of showing that your sample vehicle record mirrors your general appointments during the year. (If you are using a mileage app, synchronize the app results with the appointment book.)

The IRS illustrates two possible sampling methods:

  • One identical week each month (for example, the third week of each month)
  • Three consecutive months

We don’t recommend the one-same-week-each-month method because it is difficult to start and stop a record-keeping process. (Think about how hard it would be to create a habit, undo it, and then create it again—every month.)

For this reason, the three-month log is the superior alternative. Before getting into the three-month method, we should note that once you have done three months, you are in the habit. You might find it easier to continue all year, rather than stop this year and then have to start again next year.
newsletter
Here are the basics of how the IRS describes the three-month test:

  • The taxpayer uses her vehicle for business use.
  • She and other members of her family use the vehicle for personal use.
  • The taxpayer keeps a mileage log for the first three months of the taxable year, and that log shows that 75 percent of the vehicle’s use is for her business.
  • Invoices and paid bills show that her vehicle use is about the same throughout the year.

According to this IRS regulation, this three-month sample is adequate to prove 75 percent business use.

Although we’ve given you the basics, this is not an all-inclusive article. Should you have tax debt help questions, need Chicago business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office toll free at 1-855-743-5765 or locally in Chicago or Indiana at 1-708-529-6604. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.

Schedule-button-nb

Never miss another tip again! Join our newsletter, to receive tax reduction/wealth building tips delivered right to your inbox!

newsletter

Fact check me with IRS Regulation 1.274-5T(c)(3)(ii)(A).

General Tax Topics, Self Employed, Small Business, Tax Deductions, Tax Reduction, Uncategorized, Vehicles

2018 Last-Minute Vehicle Purchases to Save on Taxes

Long jump.

At our Chicago tax preparation office, we work with a lot of Business owners in the South Loop of Chicago that need business tax preparation. As the year ends, many business owners are looking for tips for year end tax deductions, more commonly referred to as  tax write- offs. For business owners looking for tax deductions, I have two questions: Two questions:

  • Do you need a replacement business car, SUV, van, or pickup truck?
  • Do you need tax deductions this year?

Here are some ideas for you to consider:

  1. Buy a New or Used SUV, Crossover Vehicle, or Van with a GVWR Greater than 6,000 Pounds

Let’s say that on or before December 31, 2018, you or your corporation buys and places in service a new or used SUV or crossover vehicle that the manufacturer classifies as a truck and that has a gross vehicle weight rating (GVWR) of 6,001 pounds or more. This newly purchased vehicle gives you four big benefits:

  • Bonus depreciation of 100 percent (new, thanks to the TCJA)
  • Section 179 expensing of up to $25,000
  • MACRS depreciation using the five-year table
  • No luxury limits on vehicle depreciation deductions
  1. Buy a New or Used Pickup with a GVWR Greater than 6,000 Pounds

If you or your corporation buys and places in service a qualifying pickup truck (new or used) on or before December 31, 2018, then this newly purchased vehicle gives you four big benefits:

  • Bonus depreciation of 100 percent
  • Section 179 expensing of up to $1,000,000
  • MACRS depreciation using the five-year table
  • No luxury limits on vehicle depreciation deductions

newsletter
To qualify for full Section 179 expensing, the pickup truck must have

  • a GVWR of more than 6,000 pounds, and
  • a cargo area (commonly called a “bed”) of at least six feet in interior length that is not easily accessible from the passenger compartment.

Short bed. If the pickup truck passes the more-than-6,000-pound-GVWR test but fails the bed-length test, tax law classifies it as an SUV. That’s not bad. It’s still eligible for expensing of up to the $25,000 SUV expensing limit plus 100 percent bonus depreciation. See Section 1 above for how this works.

  1. Buy a New or Used Qualifying Cargo or Passenger Van with a GVWR Greater than 6,000 Pounds

A new or used cargo or passenger van bought and placed in service on or before December 31, 2018, can qualify for four big tax benefits:

  • Bonus depreciation of 100 percent
  • Section 179 expensing of up to $1,000,000
  • MACRS depreciation using the five-year table
  • No luxury limits on vehicle depreciation deductions

Cargo van. To qualify for full Section 179 expensing, the cargo van must

  • have a GVWR of more than 6,000 pounds,
  • fully enclose the driver compartment and load-carrying area,
  • not have seating behind the driver’s seat, and
  • have no body section that protrudes more than 30 inches ahead of the leading edge of the windshield.

If the van passes the GVWR test but fails one of the other qualifying tests listed above, the law deems it an SUV.
newsletter
Passenger van. If the van has a GVWR of greater than 6,000 pounds and seats more than nine people behind the driver’s seat, it is a tax law–defined passenger van, not an SUV, and it qualifies for full Section 179 expensing of up to $1,000,000 and 100 percent bonus depreciation.

  1. Buy a Depreciation-Limited New or Used Car, SUV, Truck, or Van

If you or your corporation buys and places in service a new or used passenger vehicle such as a car (or a pickup, SUV, or van with a GVWR of 6,000 pounds or less) on or before December 31, 2018, then you or your corporation may claim up to $8,000 in bonus depreciation.

Tax reform increased the 2018 luxury passenger vehicle depreciation limits to

  • $10,000 for the first taxable year in the recovery period,
  • $16,000 for the second taxable year in the recovery period,
  • $9,600 for the third taxable year in the recovery period, and
  • $5,760 for each succeeding year in the taxable period.

Here’s how this works: Say you buy a car. You add the $8,000 in bonus depreciation to the $10,000 car limit, for a 2018 limit of $18,000. To get to this limit, you can use a combination of bonus depreciation and regular depreciation. You reduce the $18,000 limit by any personal use.

The vehicle tax rules can be confusing. Although we’ve given you the basics, this is not an all-inclusive article. Should you have tax debt help questions, need Chicago business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office toll free at 1-855-743-5765 or locally in Chicago or Indiana at 1-708-529-6604. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.

Schedule-button-nb

Never miss another tip again! Join our newsletter, to receive tax reduction/wealth building tips delivered right to your inbox!

newsletter