AFS Blog
3 Common Ways in Which Cancellation of Debt (COD) Income Can Be Tax-Free
It is not uncommon for debts to pile up beyond someone’s ability to pay, and may be even more common if we enter into a recession. Lenders will sometimes cancel (forgive) debts owed by down-on-their-luck borrowers. While the cancelled debt may be incredibly helpful in...
Businesses can save on taxes and reduce their audit potential with an S Corporation election
The S Corp election is the super tool that can both reduce tax liabilities and audit risk at the same time. Successful sole proprietorships and LLC’s can face higher tax rates due to being subject to both the ordinary income tax and the self-employment tax. They also...
2019 and 2020 Late filing penalties can now be forgiven in a great many cases
This is going to be a huge benefit to many filers. For those taxpayers, including individual 1040 returns, partnership (1065) returns and S Corporation (1120S) that: Filed late and paid a penalty or owe a penalty for late filing for the 2019 and/or 2020 tax year,...
TAX DEDUCTIONS THAT EXPIRED AT THE END OF 2021
We typically see Congress extend these kinds of things but in the current environment, that may not happen. So, here are a few of the tax rules that have expired: The 1 year increase in the child tax credit expired at the end of 2021. The credit will...
Learn how personal expenses may be partially deductible to your business
One of the best reasons to start a new business is to be able to move some of your personal expenses under your business umbrella and make them deductible. This is not an article about tax evasion. This is about using the tax code to your advantage to minimize the...
Claiming Business Expense Deductions Before You Are in Business
Business deductions are just that. They are expenses incurred in the operation of your business. The IRS says they have to be 'ordinary and necessary' for your business. The IRS doesn't define 'ordinary and necessary' well but common sense is a good guide. Think of it...
How Does the IRS Tax an LLC? It’s Up to YOU
When you file your taxes at the end of the year, you can file a sole proprietorship on a Schedule C, a C Corporation on a Form 1120, an S Corporation on a Form 1120S or a partnership on a Form 1065. There is no tax form for an LLC. If your business is registered...
BUSINESS OR HOBBY-WHY YOU SHOULD CARE
If the IRS determines that your business or investment activity is not conducted as a for-profit business, IRS Section 183 limits deductions to the amount of income from the activity. They will classify your activity as a hobby, and unlike a business, hobby losses...
TAXES ARE GOING UP
Now that we have the results of the elections, I think we can say with certainty that taxes will rise. Democrats now have thin control of the Senate and the House along with the Presidency which will allow Biden to pass at least some of his proposals. Here are some of...
Start Now to Cut your Self-Employment Taxes in 2021
If you earn your living as a contractor, you pay self-employment taxes on the profit your company makes. You could be a real estate agent, a builder, a car salesman, whatever. As a contractor, if you don't pay estimated taxes throughout the year, you're getting hit...
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