Tax Tuesday with Toby Mathis 11-10-2020

Did you vote and submit your ballot for the U.S. General Election on Nov. 5, 2020? Then, your focus may have shifted to taxes. Toby Mathis and Jeff Webb of Anderson Advisors answer tax questions related to personal and professional matters. Do you have a tax question? Submit it to taxtuesday@andersonadvisors.

Highlights/Topics:

• If a new C Corp is started and the owner is the only employee during the initial years, does the owner/employee still need to draw a salary, even if the C Corp is not profitable for the first few years? With a C Corp, there are no salary requirements; compensation is anything of value, such as a salary or car or you may not be paid at all
• Does the IRS consider your business a hobby if you have not turned a profit within five years? Three of 5 years is presumed to be a hobby
• How can I live in a home owned by my LLC that is not producing income? Putting your primary residence in an LLC is a bad idea; may cost you an unlimited exclusion (equity) or effect your 121 exclusion
• Real estate investor start-up expenses on education, classes, materials - can I write all that off my taxes once my LLC is formed? Put those expenses in a corporation, not LLC, because the corporation has to make money before expenses can be deducted
• I am a physician and work for a university hospital. During the pandemic, I have been working from home. Can I get a deduction for rent? If you are a W-2 employee for the university hospital, there is no reimbursement for rent; if you are a 1099 employee, you can get a home office deduction
• I used the HELOC of my primary residence to purchase an investment property. Any tax deduction/advantage I can take? You can’t use HELOC interest as mortgage interest on Schedule A; can only be used to improve or buy your house
• I have insurance policies in India and would like to bring the money once they are matured. Do I need to pay taxes on this money? Depends if you are a citizen or resident of the United States; use designation 15CB from chartered accountant in India that states money has been paid

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Resources:

Tax Toolbox

http://aba.link/taxtoolbox

Here's where Biden and Trump stand on your taxes

https://www.cnbc.com/2020/10/20/heres-where-biden-and-trump-stand-on-your-taxes.html

Real Estate Professional Requirements

https://www.irs.gov/pub/irs-utl/33-Real%20Estate%20Professionals.pdf

CARES Act

https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf

Individual Retirement Arrangements (IRAs)

https://www.irs.gov/retirement-plans/individual-retirement-arrangements-iras

Traditional and Roth IRAs

https://www.irs.gov/retirement-plans/traditional-and-roth-iras

Credits and Deductions

https://www.irs.gov/credits-deductions-for-individuals

Capital Gains and Losses

https://www.irs.gov/newsroom/capital-gains-and-losses-10-helpful-facts-to-know-0

Health Savings Account (HSA)

https://www.healthcare.gov/glossary/health-savings-account-hsa/

Tax Cuts and Jobs Act (TCJA)

https://www.irs.gov/tax-reform

IRS - Business Structures

https://www.irs.gov/businesses/small-businesses-self-employed/business-structures

Schedule K-1 Form 1065

https://www.irs.gov/forms-pubs/about-form-1065

Conservation Easement

https://www.conservationeasement.us/what-is-a-conservation-easement/

Alternative/Renewable Energy Tax Credits

https://www.americanprogress.org/issues/green/reports/2020/05/28/485411/renewable-energy-tax-credits-case-refundability/

Charitable Organizations

https://www.irs.gov/charities-non-profits/charitable-organizations

1099 Formhttps://www.irs.gov/pub/irs-pdf/i1099gi.pdf

https://www.irs.gov/pub/irs-pdf/i1099gi.pdf

Form W-2

https://www.irs.gov/forms-pubs/about-form-w-2

26 U.S. Code Section 183

https://www.law.cornell.edu/uscode/text/26/183

Hobby or Business? IRS Offers Tips to Decide

https://www.irs.gov/newsroom/hobby-or-business-irs-offers-tips-to-decide

121 Exclusion

https://www.irs.gov/taxtopics/tc701

Wills and Trusts

https://andersonadvisors.com/living_trusts/

Bonus Depreciation

https://www.irs.gov/newsroom/new-rules-and-limitations-for-depreciation-and-expensing-under-the-tax-cuts-and-jobs-act

Depreciation Recapture

https://www.investopedia.com/terms/d/depreciationrecapture.asp

Home Office Deduction

https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction

Schedule A

https://www.irs.gov/forms-pubs/about-schedule-a-form-1040

Schedule C

https://www.irs.gov/forms-pubs/about-schedule-c-form-1040

Schedule E

https://www.irs.gov/forms-pubs/about-schedule-e-form-1040

Self-Employment Tax

https://www.irs.gov/taxtopics/tc554

Woody vs. Commissioner

https://casetext.com/case/woody-v-commissioner-of-internal-revenue-1

HELOC

https://www.investopedia.com/mortgage/heloc/

Small Business Administration (SBA)

https://www.sba.gov/

Economic Injury Disaster Loan (EIDL)

https://www.sba.gov/funding-programs/disaster-assistance

Opportunity Zones

https://www.irs.gov/credits-deductions/opportunity-zones-frequently-asked-questions

1031 Exchange

https://www.irs.gov/pub/irs-news/fs-08-18.pdf

St. Louis Federal Reserve Economic Data (FRED)

https://fred.stlouisfed.org/

Form 15CB

https://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000007843.pdf

Toby Mathis

http://tobymathis.com/about-toby-mathis/

Anderson Advisors

https://andersonadvisors.com/

Anderson Advisors Events

https://andersonadvisors.com/all-events/

Events@andersonadvisors.com

Anderson Advisors Tax and Asset Protection Workshop

https://andersonadvisors.com/asset-protection/

Anderson Advisors Tax-Wise Workshop

https://andersonadvisors.com/tax-wise-workshop-for-businesses-investors/

Anderson Advisors Infinity Investing Workshop

https://andersonadvisors.com/investing-workshop-passive-income-generating-machine/

Anderson Advisors on YouTube

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