Tax Planning

Tax reform’s Section 199A deduction often confuses small-business owners and tax professionals alike. It’s quite possible you’ll get a Schedule K-1 from a business that omits the information you need to calculate your deduction.

What do you do?

The Affordable Care Act’s $100-a-day penalty for improper medical reimbursements likely has your attention. And it should. But you can find many reimbursements that are allowed without penalty, including the ability to reimburse Medicare when you have fewer than 20 employees.

If you have no taxable income, should you claim the home-office tax deduction?

Answer: yes. Even with no taxable income, you have two for-sure tax benefits from the home office, and you likely have a third benefit.

The Tax Cuts and Jobs Act tax reform added new tax code Section 199A, which created a 20 percent tax deduction possibility for you if your rental property (a) has profits and (b) can qualify as a trade or business.

How does the tax law treat the classic or antique car when you use it for business? Can you deduct it just as you would any car you use in business?

To deduct the classic or antique car,

The Section 199A 20 percent tax deduction is a gift from lawmakers. Literally, you don’t earn this deduction; it’s simply there for you if you qualify.

Under the trade or business rule, your rental property profits can create the deduction.

The recent tax reform contains two big changes to how much you can deduct in mortgage interest for tax years 2018 through 2025:

When you know the rules, you can party with your employees and deduct 100 percent of the cost.

You operate your professional practice as a C corporation. Your spouse rents your office to your C corporation on a triple net lease. Does your spouse qualify for the Section 199A deduction on the rental income, and if not, what can be done about it?

If you operate your business as a corporation but own the business car personally, you have no vehicle deduction possibility without corporate reimbursement, because the Tax Cuts and Jobs Act does not allow employee business expenses for years 2018 through 2025.