The more you know and learn about taxes, the less likely you are to be audited. According to the recently published 2018 Internal Revenue Service (IRS) Data Book, only 0.5 percent of all returns filed in the 2017 calendar year were audited. Toby Mathis and Toni Covey of Anderson Advisors often answer your tax questions with “it depends.” Why? Facts and circumstances. Do you have a tax question? Submit it to taxtuesday@andersonadvisors.
- How do you know if you're overpaying taxes for your LLC? Refer to tax designation of LLC and compare it to other choices (i.e., corporation, partnership, sole proprietorship)
- What are the most beneficial types of qualified retirement plans (QRPs) and LLCs for tax shelters? It depends, but try things that defer taxes (401k, real estate, C or S Corp)
- How can we protect a Special Needs Trust from probate? Avoid probate through a living trust by adding special needs provisions for when it becomes irrevocable
- I have several personal IRA accounts and want to convert them to a QRP in our real estate investment company. Can I use that money to purchase more properties? Yes
- I have owned a property located in a qualified opportunity zone for a number of years. Is there any special tax benefit, if I install a new roof? No
- Do I always need to take salary out of my C Corp? No, salary is a part of compensation and still requires withholding and paying taxes
- How do owners receive a yearly salary from their businesses? You pay it; there's no federal rule for pay periods, but some states require pay periods for certain employees
- Do I have to designate myself as a dealer, if I do fix and flips? IRS designates you as a dealer based on facts and circumstances; doesn't matter how long you hold a property
- Can I write off a vehicle that’s 6,000 pounds or more? Yes, you can write off entire cost, but limited to $18,000 a year, and more than 50% must be for business use
- What is a 1031 exchange? Selling real estate and buying more of equal or greater value to not pay taxes and use an intermediary
- Does S Corp need to pay payroll taxes? You pay some payroll taxes, as opposed to sole proprietorship - where you pay 100% of payroll taxes
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